Has anyone been tempted to buy AMZN?

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soboggled
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Re: Has anyone been tempted to buy AMZN?

Post by soboggled » Thu Sep 29, 2016 12:42 pm

InvestorAdam wrote:
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.
I didn't say just money. With wealth at $80B, power is just as important to him. He has contributed less than .1% of his wealth, the biggest of which is a $42M 10,000 year clock plaything with his name all over it. Hey, it's his money but his philanthropy is kind of revealing. Sort of like Steve Jobs minus the creative drive.

staybalanced
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Re: Has anyone been tempted to buy AMZN?

Post by staybalanced » Thu Sep 29, 2016 1:52 pm

soboggled wrote:
InvestorAdam wrote:
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.
I didn't say just money. With wealth at $80B, power is just as important to him. He has contributed less than .1% of his wealth, the biggest of which is a $42M 10,000 year clock plaything with his name all over it. Hey, it's his money but his philanthropy is kind of revealing. Sort of like Steve Jobs minus the creative drive.

I am not sure what his documented philanthropy says about him, so I guess I don't follow that.

He's pretty creative, I would argue more creative than Steve Jobs.

BTW Amazon Revenue is many multiples of Alibaba, I am not sure about the # of packages, but the dollars and cents are what counts in that business.

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Pajamas
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Re: Has anyone been tempted to buy AMZN?

Post by Pajamas » Thu Sep 29, 2016 2:00 pm

Kalo wrote: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.
It also means that 4.5 million shares will need to be purchased at some point to cover the shorts. That's about two full days trading volume and can push the price higher. I have seen a lot of people post about shorting Amazon and then having to buy it back at higher prices over the years and many short sellers just give up trying completely.

Compared to the outstanding number of shares, which is about 475 million, it is also not much.

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Re: Has anyone been tempted to buy AMZN?

Post by lemonPepper » Thu Sep 29, 2016 2:23 pm

No actually, I kick myself for not buying when it was lower. And I convince myself that it's a bad time to buy because it has already gone up too much. So I've stayed off individual stocks.


'There were some companies that I thought were under valued. They did go up in value and I did not sell. I waited too long and they dropped below my original price. I learned from that mistake.

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Re: Has anyone been tempted to buy AMZN?

Post by BW1985 » Thu Sep 29, 2016 2:26 pm

lemonPepper wrote: 'There were some companies that I thought were under valued. They did go up in value and I did not sell. I waited too long and they dropped below my original price. I learned from that mistake.
I almost started playing this game before I found BH's, got lucky and learned without any mistakes.
"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

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Re: Has anyone been tempted to buy AMZN?

Post by Pajamas » Thu Sep 29, 2016 2:35 pm

saltycaper wrote: AWS was no surprise. .
Actually when they first started reporting AWS separately, it was a huge surprise even to people who were generous in their expectations.

If you look at a long-term chart of the stock price, you will see a fairly consistent upwards slope on a logarithmic scale since 2009.

I do not think Amazon's best growth as a company is behind it. I think it is poised to explode into new areas of services as well as into new markets where it only has footholds, such as South America and India. They have built a scaleable company.

If Elon Musk ever is able to start a colony on Mars, Amazon will be making deliveries there.

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Re: Has anyone been tempted to buy AMZN?

Post by saltycaper » Thu Sep 29, 2016 3:43 pm

Pajamas wrote:
saltycaper wrote: AWS was no surprise. .
Actually when they first started reporting AWS separately, it was a huge surprise even to people who were generous in their expectations.
Clearly it was a surprise to the overall market, but it was not a surprise to everyone. Ditto for Google pre-IPO and Apple pre-iPhone. There were people who saw the market as severely underestimating what these companies would do compared to a market that lacked imagination, was short-sighted, fearful from the tech collapse, or whatever the cause may be. The same is true for some companies who didn't survive. Analysts would talk about how Sun Microsystems had to monetize Java and make more headway in the x86 market, while others with more foresight would listen to such comments and wonder if the analysts really knew anything about the company outside of its financial statements and filings. Anyway, the big money is made early on, and we're pretty late in the game with Apple, Google, and Amazon, even if they do outperform the market going forward. It's a lot harder to grow 10-fold quickly when you're already among the largest companies in the world.
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Re: Has anyone been tempted to buy AMZN?

Post by TomatoTomahto » Thu Sep 29, 2016 4:41 pm

Pajamas wrote:If Elon Musk ever is able to start a colony on Mars, Amazon will be making deliveries there.
Soon, Pajamas, soon. :sharebeer
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Has anyone been tempted to buy AMZN?

Post by Valuethinker » Thu Sep 29, 2016 4:51 pm

soboggled wrote:
InvestorAdam wrote:
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.
I didn't say just money. With wealth at $80B, power is just as important to him. He has contributed less than .1% of his wealth, the biggest of which is a $42M 10,000 year clock plaything with his name all over it. Hey, it's his money but his philanthropy is kind of revealing. Sort of like Steve Jobs minus the creative drive.
That may be true compared to Zuckerberg, Gates, Buffett.

But remember: Bezos's wealth is 90%+ in *one company*. He isn't really "worth" 80 billion dollars until he sells that stock, pays any tax, and diversifies.

It's like people here (raises hand) who were once "millionaires" during the dot com bubble (well, close enough in Yen anyways ;-)). We weren't really rich, it was just paper with a value on it. Until we actually sold it wasn't real money.

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Re: Has anyone been tempted to buy AMZN?

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

Pajamas wrote:
Kalo wrote: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.
It also means that 4.5 million shares will need to be purchased at some point to cover the shorts. That's about two full days trading volume and can push the price higher. I have seen a lot of people post about shorting Amazon and then having to buy it back at higher prices over the years and many short sellers just give up trying completely.

Compared to the outstanding number of shares, which is about 475 million, it is also not much.
It doesn't sound a like big short. There may be some natural holders who need to hedge their long term positions.

I don't know what the average is for a big ticket stock, but I don't think 1% is that much, at least off the top of my head.

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Re: Has anyone been tempted to buy AMZN?

Post by Valuethinker » Thu Sep 29, 2016 4:55 pm

InvestorAdam wrote:
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.
Bezos sees huge new markets, still ripe to be explored. He's willing to make expensive mistakes (didn't they do a smartphone) in pursuit of those markets.

It's like saying to Sam Walton when he got to his first $10bn, say, "why don't you give up?" Or Warren Buffet.

They *like* running their companies. Bezos drives Amazon hard, because he drives himself hard.

And he has enough influence over the company that he can prevent anyone lobbying that it should pay a dividend-- he is CEO and Founder shareholder. Buffett never pays a dividend, it would just give him tax problems. Ditto Bezos.

Presumably Bezos believes his long term return on capital based on investing in his own company is greater than he could get with a well diversified portfolio. Buffett has taken a similar view. Bezos has meanwhile given himself a listening post/ speaking post by owning one of the world's most influential newspapers, the Washington Post. Other than the Wall Street Journal or the NYT, there isn't a better podium in American journalism.

If Amazon doesn't crater, he will go down in history as having been another Sam Walton, or another (name of guy who created Sears), etc. The everything everywhere store.

He's also sufficiently experimental that if one day someone told me "Amazon has stopped doing books" I wouldn't be 100% surprised. He sees the nature of the online world is one of experimentation, failure, rapid change, domination by a handful of leading companies and brands.

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Re: Has anyone been tempted to buy AMZN?

Post by Theoretical » Thu Sep 29, 2016 5:12 pm

Except for it's price to earnings ratio, its other fundamentals are even worse than when the P/E was over 600.

Historical Current Sector S&P 500 Amazon 5 year average (price to sales is 3 years)
P/E 206.1 44.9 19.8 630.8
Price/Book 23.8 9.0 2.8 15.2
Price/Sales 3.3 2.2 1.9 2.1
P/Cash Flow 31.3 9.6 12.3 28.8

Amazon's investment model essentially requires it to keep growing and growing and growing, without making ANY serious bad investments. Furthermore, that continuous extreme growth upwards and outwards means they're eventually on a collision course with antitrust regulators, quite possibly for both horizontal and vertical integration issues, but especially horizontal.

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Re: Has anyone been tempted to buy AMZN?

Post by pennstater2005 » Thu Sep 29, 2016 5:12 pm

That's the beauty of not paying much attention to the markets. Overall, I know if they're up or down by catching it in the news occasionally but I have no idea what individual stocks are doing anymore. No temptation at all.
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Re: Has anyone been tempted to buy AMZN?

Post by Church Lady » Thu Sep 29, 2016 5:13 pm

Amazon has always looked expensive to me, and only recently started to turn a profit. It never tempted me.

Today's PE is 206.44. That means you are paying $206 for $1 worth of earnings. It pays NO dividend. It has a beta of 1.64 (it moves 1.64x as much as the market. That's fun on the way up, but when the market turns ... ). It trades at 2.81 x 5 year earnings growth, which means it is richly priced even for the momentum players. It has a profit margin of 1.6%. Today, someone paid 206x trailing earnings, and 2.81 x 5 earnings growth, for a company with a tiny 1.6% profit margin!

Of course it is overpriced. It's always overpriced.

And yet, it keeps charging forward. This stock has been mocking me for years. :annoyed
He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity.

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Re: Has anyone been tempted to buy AMZN?

Post by Pajamas » Thu Sep 29, 2016 6:57 pm

Theoretical wrote:without making ANY serious bad investments.
Amazon has made plenty of bad investments and false starts. Off-hand, someone just mentioned the Fire phone which was $170 million, MyHabit.com got axed not too long ago, the investment in Living Social was a $175 million fiasco. They invested $60 million in Kosmo.com, they ended the Register credit card payment device and service, axed Amazon Local, etc.

Amazon provides as little detail on the numbers as they can but they have taken impairments and ended initiatives on a regular basis.

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Re: Has anyone been tempted to buy AMZN?

Post by humbledinvestor » Wed Oct 05, 2016 9:50 pm

InvestorAdam wrote:
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.
100% agreed. It is not the company's only goal. They are very focused on the customer and innovation, it eventually leads to money but it's never talked about in those terms.

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Re: Has anyone been tempted to buy AMZN?

Post by BogleBoogie » Wed Oct 05, 2016 9:54 pm

I just picked some AMZN up a few weeks ago. Actually, I buy it every two weeks when my index fund purchase goes through.
Last edited by BogleBoogie on Thu Oct 06, 2016 8:15 am, edited 1 time in total.

ddurrett896
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Re: Has anyone been tempted to buy AMZN?

Post by ddurrett896 » Wed Oct 05, 2016 10:07 pm

Amazon is a giant Ponzi scheme that nets no profit!

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Re: Has anyone been tempted to buy AMZN?

Post by Valuethinker » Thu Oct 06, 2016 3:41 am

ddurrett896 wrote:Amazon is a giant Ponzi scheme that nets no profit!
It certainly is not literally a Ponzi scheme-- check defn of same, but that is an investment scheme where payouts to old investors are funded by cash flows from new investors. Amazon only issues stock when options are exercised, AFAIK, and buys them back? And it doesn't pay a dividend. This is nothing like Madoff (or Ponzi).

If you look at Cash Flow from Operations, before investing, then Amazon is not a bad business.

The interesting question is what would it look like if it stopped investing? I.e. is this a business model that requires constant investment in physical assets & intellectual property (as Google and Facebook most assuredly are) or is it simply in a growth phase, driven by a Founder CEO and largest shareholder who believes the internet mantra "only disrupt".

Some of their product areas are decidedly "counter intuitive" to me-- existing players don't make great margins (groceries). However I am your perfect Amazon Prime customer (read somewhat lazy) so indeed, it seems to work. The reputational issue (when I had a several hundred dollar hard drive stolen, they refunded it with no question) alone.

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Re: Has anyone been tempted to buy AMZN?

Post by Valuethinker » Thu Oct 06, 2016 3:44 am

Pajamas wrote:
Theoretical wrote:without making ANY serious bad investments.
Amazon has made plenty of bad investments and false starts. Off-hand, someone just mentioned the Fire phone which was $170 million, MyHabit.com got axed not too long ago, the investment in Living Social was a $175 million fiasco. They invested $60 million in Kosmo.com, they ended the Register credit card payment device and service, axed Amazon Local, etc.

Amazon provides as little detail on the numbers as they can but they have taken impairments and ended initiatives on a regular basis.
These are tiny writeoffs for a company the size of Amazon.

I agree though that it lowers the quality of earnings and earnings disclosure-- should in theory lead to a lower PE (little sign of that, so far). The shares are priced for perfect execution, and the one thing we know about big companies is that they don't do perfect execution, every time.

More interested to see if their logistics businesses work out. That's a multi billion dollar investment. I cannot see the groceries thing (groceries is such an attractive market to be in? Existing competitors are so inefficient they can just be competed away?).

There's 2 wars (at least) Amazon is fighting: one with Google, FB etc. as they invade the online shopping space, AWS etc; the other with WalMart for mass online to the people who historically have not bought online (but now that everyone has a smartphone, do). To me the international side and the former are more interesting than duking it out with WalMart but I am not running Amazon ;-).

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Re: Has anyone been tempted to buy AMZN?

Post by Boglegrappler » Thu Oct 06, 2016 7:07 am

Bezos' compensation last year was only 1.6 million. That's not much for someone running the company that he does.

I'm happy to invest in companies run by the major shareholder where they're trying to make themselves richer through the company performance. That's a lot better than the CEO trying to enrich himself through salary and options.

Amazon is still growing in the mid-upper teens in sales. This is an astounding accomplishment given its size.

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Re: Has anyone been tempted to buy AMZN?

Post by Valuethinker » Thu Oct 06, 2016 8:16 am

Boglegrappler wrote:Bezos' compensation last year was only 1.6 million. That's not much for someone running the company that he does.

I'm happy to invest in companies run by the major shareholder where they're trying to make themselves richer through the company performance. That's a lot better than the CEO trying to enrich himself through salary and options.

Amazon is still growing in the mid-upper teens in sales. This is an astounding accomplishment given its size.
He's quite Buffett-like in that respect. Put all your eggs in one basket and watch that basket *very closely*.

Bill Gates' genius was to see that the operating system and the processor mattered more than the PC - hence the Wintel paradigm. But MSFT has struggled to deal with the internet.

Steve Jobs' was to take techie products and make them must have consumer products (Elon Musk has done something similar) with elegant style & design. And to lock the customer in, end to end, but make them love you for it (because the products are user friendly and way cool). Microsoft windows Ecchh.... Apple Yahh....

Sergey and Alex blundered (?) into total vertical domination of the "internet of intentions". The single most valuable place on the entire internet is www.google.com (if you have the world's largest server farms backing it).

Zuckerberg's megalomania led him to see that how people interrelate on the web was the next field of combat-- Web 2.0. Again, with network benefits meaning most of us keep only 1 or 2 social networking properties.

Bezos? For me the jury is still out. But he has concluded that you need vertical domination-- integrate upstream and downstream into product (Netflix like) and distribution (logistics). It's an amazing story albeit one where I cannot yet see the ending. The other thing he has is this constant willingness to innovate, experiment, and lose money doing it.

Each of these people has grasped some essential truth about the economics of the internet, and then driven, by luck or good judgement, to be the leading player in that truth.

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Re: Has anyone been tempted to buy AMZN?

Post by Theoretical » Thu Oct 06, 2016 9:00 am

Valuethinker wrote:
Boglegrappler wrote:Bezos? For me the jury is still out. But he has concluded that you need vertical domination-- integrate upstream and downstream into product (Netflix like) and distribution (logistics). It's an amazing story albeit one where I cannot yet see the ending. The other thing he has is this constant willingness to innovate, experiment, and lose money doing it.
This is I think where Amazon will eventually meet its doom: antitrust regulators.

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Re: Has anyone been tempted to buy AMZN?

Post by Pajamas » Thu Oct 06, 2016 6:32 pm

Boglegrappler wrote:Bezos' compensation last year was only 1.6 million. That's not much for someone running the company that he does.
His base salary is under $100,000 and most of his compensation of $1.6 million is the cost of providing security.

His real compensation is stock-based. Bezos sold a million shares of Amazon for $757 million in early August and still holds over 80 million shares.

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Re: Has anyone been tempted to buy AMZN?

Post by itstoomuch » Thu Oct 06, 2016 6:44 pm

Can't remember :?
Don't hold any in Discretionary.
DId own BABA and lost $, if I had held for another month, I would be +.
Both companies have too many variables for me to track. I like simple companies. Many utilities have branched out and diversified which makes them complicated.
YMMV
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Re: Has anyone been tempted to buy AMZN?

Post by Valuethinker » Fri Oct 07, 2016 3:27 am

itstoomuch wrote:Can't remember :?
Don't hold any in Discretionary.
DId own BABA and lost $, if I had held for another month, I would be +.
Both companies have too many variables for me to track. I like simple companies. Many utilities have branched out and diversified which makes them complicated.
YMMV
And utilities (electric) are in the middle of industry disruption-- the move to a smart grid and distributed generation. The pure wire providers have a decent business (National Grid owns assets in USA; so does Fortis (TSX listed); there is at least one other-- all own long distance transmission businesses) as a grid with high renewables needs more interconnections because renewables are intermittent (and also you can arbitrage price swings better).

I am not so au fait with gas pipelines etc. but one has to be really careful, the whole utility industry is going to be the center of such huge disruption in the next 20 years.

Interesting to look at the characteristics of what Buffett is buying in utilities-- but he needs a place to deploy billions of capital at a safe, regulated rate of return (similar strategy with railroads, another utility business).

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Re: Has anyone been tempted to buy AMZN?

Post by Valuethinker » Fri Oct 07, 2016 3:28 am

Theoretical wrote:
Valuethinker wrote:
Boglegrappler wrote:Bezos? For me the jury is still out. But he has concluded that you need vertical domination-- integrate upstream and downstream into product (Netflix like) and distribution (logistics). It's an amazing story albeit one where I cannot yet see the ending. The other thing he has is this constant willingness to innovate, experiment, and lose money doing it.
This is I think where Amazon will eventually meet its doom: antitrust regulators.
Google is the one I always think this would happen to. Since search is a natural monopoly with as far as I can see, increasing returns to scale on any size, the most efficient solution is one main search engine provider, regulated.

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Re: Has anyone been tempted to buy AMZN?

Post by letsgobobby » Fri Oct 07, 2016 8:29 am

I am happy every day that I don't own a single share of a single individual stock, so I do not have to ponder questions like whether AMZN is tempting; I am not tempted.

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