Amazon....we all have seen this before :)

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bg5
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Amazon....we all have seen this before :)

Post by bg5 » Thu May 16, 2019 8:04 am

Hey Gang,

Thoughts on Amazon as it appears that a lot of younger people are jumping on stocks like Amazon in hopes that they hit a grand slam. The stock as of now looks rock solid to me as it has a lot of diversification and in my opinion is not a one trick pony.

With that being said we have all seen stocks like this come and go and those that seem unbeatable are eventually defeated after a certain time period.

The questions I have is.....how long will Amazon dominate????? I think that eventually the government will have to step in and do something but just as everyone else I have no clue :)

Thoughts?

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oldzey
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Re: Amazon....we all have seen this before :)

Post by oldzey » Thu May 16, 2019 8:14 am

Nobody knows nothing. I gave up on single stocks a long time ago.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

BeerTooth
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Re: Amazon....we all have seen this before :)

Post by BeerTooth » Thu May 16, 2019 8:22 am

1. nobody knows nothing. I don't buy any individual stocks

2. if anybody knows anything, it's Bezos, who remarked "Amazon is not too big to fail … In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years,” Bezos told staff

https://www.theguardian.com/technology/ ... ing-report

whomever
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Re: Amazon....we all have seen this before :)

Post by whomever » Thu May 16, 2019 8:36 am

"how long will Amazon dominate"

I dunno, but for reference: if we steer the olde time machine back to 1975ish, the three giants of American retail were JC Penny, Montgomery Wards, and Sears Roebuck.

If you had invested $10k in Monkey Wards in 1975 ... it went bankrupt around 2001.
If you had invested $10k in JC Penney in 1976 it would be worth $2314 today (vs. $853k if you's picked VFINX instead) (n.b. - that 2341 isn't followed by a 'k')
I dunno about Sears - it was bought by KMart etc, so there isn't just one ticker to follow, but it's on the verge of bankruptcy right now.


I think that 'buy the whole market' seems to work quite a bit better than 'buy the retail behemoths'.

Valuethinker
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Re: Amazon....we all have seen this before :)

Post by Valuethinker » Thu May 16, 2019 8:39 am

whomever wrote:
Thu May 16, 2019 8:36 am
"how long will Amazon dominate"

I dunno, but for reference: if we steer the olde time machine back to 1975ish, the three giants of American retail were JC Penny, Montgomery Wards, and Sears Roebuck.

If you had invested $10k in Monkey Wards in 1975 ... it went bankrupt around 2001.
If you had invested $10k in JC Penney in 1976 it would be worth $2314 today (vs. $853k if you's picked VFINX instead) (n.b. - that 2341 isn't followed by a 'k')
I dunno about Sears - it was bought by KMart etc, so there isn't just one ticker to follow, but it's on the verge of bankruptcy right now.


I think that 'buy the whole market' seems to work quite a bit better than 'buy the retail behemoths'.
About 2003 that was WalMart, which seemed to conquer all before it, whereas Amazon share price was in a slump where it did not beat its 2000 share price for something like another 13 years.

WalMart has struggled since then. I believe there was a figure that WalMart had more products in its online catalogue than Amazon. But that hasn't helped it.

onourway
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Re: Amazon....we all have seen this before :)

Post by onourway » Thu May 16, 2019 8:46 am

Amazon has a major problem on their hands with counterfeit products and poor quality control on their inventory. Amazon doesn't appear interested in doing anything about it. We just went through a period where about 6 shipments in a row were either counterfeit and didn't work, broken, or simply products of such low quality that they only worked once or twice before breaking. I see a lot of opportunity for other retailers to come in and fill this space once the cheap money party ends. Granted this may take years or even decades to happen, but there is no way I would consider Amazon 'diversified' in the same way owning the total market is.

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jeffyscott
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Re: Amazon....we all have seen this before :)

Post by jeffyscott » Thu May 16, 2019 9:08 am

The internet tells me Amazon started in 1994, so I think comparisons to dominant retailers of the past, should go back to something like 25 years after they started, so that's Sears from 1918, Walmart from 1987.

Amazon is not just a retailer, for example isn't Amazon web services the big profit center for them?
(Sears did some different things in the past and does still have their home services component.)
Most of its operating profit is generated by its cloud services platform, Amazon Web Services (AWS), a pioneer in the fast-growing space. The unit accounted for 58% of operating profit in last year's fourth quarter...

In 2018, AWS booked almost $26 billion in revenue, a 47% increase from the year prior, and generated more than $7 billion in operating income.

...in e-commerce...the company lost $2 billion on $66 billion in international sales last year...it made $7 billion in operating profit on $141 billion in sales in North America.
https://www.investopedia.com/how-amazon ... ey-4587523
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jhfenton
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Re: Amazon....we all have seen this before :)

Post by jhfenton » Thu May 16, 2019 9:13 am

I love Amazon, but I wouldn't touch their stock.

Amazon's big retail advantage right now is in delivery logistics. I decided on Tuesday afternoon to order a rowing machine. The manufacturer or the number one third party retailer could have it to me in a week or two. Amazon is going to deliver it today at the same price. So of course, I also bought a mat from them, to be delivered today. And yesterday, I added a cheap phone cradle, also to be delivered today.

But I don't believe that their logistical advantage is sustainable. Other large retailers are starting to catch up. (They're not there yet.) And in the coming era of autonomous delivery vehicles, delivery costs and times overall should drop. In 20 years, I can imagine many smaller retailers being able to deliver almost anything anywhere in 24-48 hours (or less) at low cost.

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Ged
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Re: Amazon....we all have seen this before :)

Post by Ged » Thu May 16, 2019 9:14 am

onourway wrote:
Thu May 16, 2019 8:46 am
Amazon has a major problem on their hands with counterfeit products and poor quality control on their inventory.
Yes, Amazon's third party sellers have to be approached with trepidation. Many are shipping product from China to you. Some list counterfeit products under the genuine manufacturer listing. Others have substantially worse return policies.

Unless I have specific knowledge of the vendor I make very sure that when I order something from Amazon it is sold and shipped by Amazon. Otherwise your protections are minimal.

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TheTimeLord
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Re: Amazon....we all have seen this before :)

Post by TheTimeLord » Thu May 16, 2019 9:21 am

bg5 wrote:
Thu May 16, 2019 8:04 am
Hey Gang,

Thoughts on Amazon as it appears that a lot of younger people are jumping on stocks like Amazon in hopes that they hit a grand slam. The stock as of now looks rock solid to me as it has a lot of diversification and in my opinion is not a one trick pony.

With that being said we have all seen stocks like this come and go and those that seem unbeatable are eventually defeated after a certain time period.

The questions I have is.....how long will Amazon dominate????? I think that eventually the government will have to step in and do something but just as everyone else I have no clue :)

Thoughts?
https://www.cnn.com/2019/05/16/investin ... index.html
In an interview earlier this month, Buffett mentioned that one of Berkshire Hathaway's investment managers had taken a stake in Amazon, though he did not disclose the amount. In a filing late Wednesday, Berkshire revealed the stake: 483,300 shares, worth $904 million based on Wednesday's closing price.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

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djpeteski
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Re: Amazon....we all have seen this before :)

Post by djpeteski » Thu May 16, 2019 9:32 am

I own a lot of amazon (I think), through mutual funds.

...

I just confirmed it. It is a top ten holding of Fidelity Total Market Index Fund.

Dottie57
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Re: Amazon....we all have seen this before :)

Post by Dottie57 » Thu May 16, 2019 9:35 am

I haven’t checked lately, but what is Amazon’s profit in the last five years?

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Kenkat
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Re: Amazon....we all have seen this before :)

Post by Kenkat » Thu May 16, 2019 9:39 am

The grand slam has already been hit; now Amazon is trying to hold on to its lead. As a stock, it may continue to grow from here, but not nearly at the pace it has in the past. This is one big benefit of holding a total market fund or a small/mid-cap fund - you are invested in these stocks before the big run up.

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Re: Amazon....we all have seen this before :)

Post by onourway » Thu May 16, 2019 9:42 am

Ged wrote:
Thu May 16, 2019 9:14 am
onourway wrote:
Thu May 16, 2019 8:46 am
Amazon has a major problem on their hands with counterfeit products and poor quality control on their inventory.
Yes, Amazon's third party sellers have to be approached with trepidation. Many are shipping product from China to you. Some list counterfeit products under the genuine manufacturer listing. Others have substantially worse return policies.

Unless I have specific knowledge of the vendor I make very sure that when I order something from Amazon it is sold and shipped by Amazon. Otherwise your protections are minimal.
Even buying from Amazon direct is no guarantee of quality. Yes, you will get your money back, but Amazon's own warehouses are filled with counterfeit and damaged product. (All of the items we'd purchased were shipped direct from Amazon).

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G12
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Re: Amazon....we all have seen this before :)

Post by G12 » Thu May 16, 2019 9:46 am

Kenkat wrote:
Thu May 16, 2019 9:39 am
The grand slam has already been hit; now Amazon is trying to hold on to its lead. As a stock, it may continue to grow from here, but not nearly at the pace it has in the past. This is one big benefit of holding a total market fund or a small/mid-cap fund - you are invested in these stocks before the big run up.
Total market, yes. Small/mid-cap can be bi-directional, ie former larger company with declining performance.

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Re: Amazon....we all have seen this before :)

Post by ERguy101 » Thu May 16, 2019 9:50 am

whomever wrote:
Thu May 16, 2019 8:36 am
(vs. $853k if you's picked VFINX instead) (n.b. - that 2341 isn't followed by a 'k')
I see these calculations all the time, are they true? That a single $10,000 investment 44 years ago would be worth $853,000? Like you could have put $10,000 into an index fund, waited, and then you would have almost a million? No monthly contributions, nothing, just the initial investment?

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Re: Amazon....we all have seen this before :)

Post by DonIce » Thu May 16, 2019 9:56 am

bg5 wrote:
Thu May 16, 2019 8:04 am
Hey Gang,

Thoughts on Amazon as it appears that a lot of younger people are jumping on stocks like Amazon in hopes that they hit a grand slam. The stock as of now looks rock solid to me as it has a lot of diversification and in my opinion is not a one trick pony.

With that being said we have all seen stocks like this come and go and those that seem unbeatable are eventually defeated after a certain time period.

The questions I have is.....how long will Amazon dominate????? I think that eventually the government will have to step in and do something but just as everyone else I have no clue :)

Thoughts?
Amazon is a very solid company with great continued growth prospects. However, it is already one of the largest companies in the world by market cap. The very largest companies simply can't deliver double digit growth for long, because then their market cap would be absurd relative to the world economy. Your Amazon stock may go on to deliver 5-6% yearly growth perhaps, but you're not gonna get another 10x increase in the next ~7 years as you got in the last ~7 years, because if you did, its market cap would be $10 trillion, or around 1/10th of world GDP.

To make money picking individual stocks, you gotta do it before they've already reached the top 3 companies by market cap.

whomever
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Re: Amazon....we all have seen this before :)

Post by whomever » Thu May 16, 2019 9:59 am

"No monthly contributions, nothing, just the initial investment?"

It assumes you reinvested distributions, and ignores taxes. So effectively what would happen if you sent in a check to your IRA and then went on a 40 odd year vacation. FWIW I got the numbers here:


https://quotes.morningstar.com/chart/fu ... A%5B%5D%7D

ETA: mind you, this is all nominal dollars. $10K real in 1976 is worth $46k today, or flipping things $853k today would only have been $191k in 1976, so your investment went up 19X in 43 years, in real terms. This is why it's really advantageous to save what you can early, instead of leaving it until middle age.

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Re: Amazon....we all have seen this before :)

Post by Jags4186 » Thu May 16, 2019 10:14 am

ERguy101 wrote:
Thu May 16, 2019 9:50 am
whomever wrote:
Thu May 16, 2019 8:36 am
(vs. $853k if you's picked VFINX instead) (n.b. - that 2341 isn't followed by a 'k')
I see these calculations all the time, are they true? That a single $10,000 investment 44 years ago would be worth $853,000? Like you could have put $10,000 into an index fund, waited, and then you would have almost a million? No monthly contributions, nothing, just the initial investment?
Well, no. The first index fund was Vanguards 500 fund released in 1977. Had you invested $10,000 in that in a tax advantaged account upon release you’d have $835k today.

Keep in mind in 1977 $10,000 is the equivalent of $42,000 today so your buying power is 20x greater, not 83x greater.

Coltrane75
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Re: Amazon....we all have seen this before :)

Post by Coltrane75 » Thu May 16, 2019 10:21 am

Just for fun, in baseball the odds of hitting a grand slam are very slim, "The odds of having bases loaded and hitting a home run are extremely small and there are an average of 135.6 grand slams in an entire season, or odds of about .07%."

Source: https://www.rockiesventureclub.org/unca ... p-unicorn/

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Re: Amazon....we all have seen this before :)

Post by MotoTrojan » Thu May 16, 2019 10:24 am

Diversification is not a good metric for valuing a stock, that is a technique for reducing single stock risk.

Amazon has a price-to-earnings (PE) ratio of 76.8. The S&P500 average historically is closer to 16-20 depending on what era you look at, and people lately get terrified of the CAPE being in the low 30's and think the market will fall apart. Amazon is all but guaranteed to continue outright dominating the consumer market, I don't think anyone disagrees with that, but with such a high PE it needs to beat expectations to dominate the stock market.

Compare this to Apple's 15.9 PE. They have similar market-cap but Apple doesn't need to grow faster than the market to give you a market-return. Amazon needs to grow almost 5 times more than the market to give you a market return.

Also I don't think young people have as big of an impact on a stock price as you'd think. In the US the market is dominated by institutional investors.

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Re: Amazon....we all have seen this before :)

Post by jeffyscott » Thu May 16, 2019 10:35 am

G12 wrote:
Thu May 16, 2019 9:46 am
Kenkat wrote:
Thu May 16, 2019 9:39 am
The grand slam has already been hit; now Amazon is trying to hold on to its lead. As a stock, it may continue to grow from here, but not nearly at the pace it has in the past. This is one big benefit of holding a total market fund or a small/mid-cap fund - you are invested in these stocks before the big run up.
Total market, yes. Small/mid-cap can be bi-directional, ie former larger company with declining performance.
In a cap weighted total market fund, you will have less invested before a run-up than after. And it's one directional, the only exit is by declining to insignificance. So after enjoying the run-up, you'll also fully participate in the decline, should it come.

Your results in a total market fund will always be dominated by a few large cap companies.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: Amazon....we all have seen this before :)

Post by Reb Tevye » Thu May 16, 2019 10:47 am

I just bought some things at walmart.com instead of amazon.com.

So my thought is that you can mark today as the inflection point.
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Valuethinker
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Re: Amazon....we all have seen this before :)

Post by Valuethinker » Thu May 16, 2019 12:00 pm

A not-to-be-ignored-factor is the Founder Factor.

WalMart is a classic case of a business that has struggled since its Founder died. Apple has done very well since Steve Jobs died, but it is arguable that it is not as innovative in terms of products as it was under his leadership. Microsoft certainly had strategic issues since Bill Gates stopped running it.

A lot may depend upon Bezos and his restless fear of corporate obsolescence and decline. Constantly hounding Amazon to improve performance and to diversify into new areas .. his famous line about the Kindle Fire phone (roughly "we will have far bigger failures in our corporate history").

If and when Bezos is not running the business, or has his eye off the ball (his divorce will be an important test), then the business may struggle to maintain its momentum. Bloomberg I think did not do as well when Michael Bloomberg was off being Mayor of NYC.

Corporate culture is a thing, and in a Founder-run business it is shaped by the Founder(s), and it's often an important driver of competitive advantage.

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Re: Amazon....we all have seen this before :)

Post by boomer_techie » Thu May 16, 2019 5:12 pm

onourway wrote:
Thu May 16, 2019 9:42 am
Even buying from Amazon direct is no guarantee of quality. Yes, you will get your money back, but Amazon's own warehouses are filled with counterfeit and damaged product. (All of the items we'd purchased were shipped direct from Amazon).
Amazon allows small time sellers to procure their own product, and send it to Amazon for the "fulfilled by Amazon" service. The problem is that Amazon mingles the individual sellers' items with their own procured stock. The result: Instead of product direct from a manufacturer, you might receive an item that previously came from a thrift store, yard sale, fire sale, or is counterfeit.

...

Decades ago, businesses came up with an innovative distribution system: Products were delivered to well lit clean warehouses in every town. Purchasers were given a price break because they were burdened with the job of pulling their own orders from the warehouse. (These warehouses were called stores.)

The pendulum is now swinging to huge regional warehouses where the merchant's workers do the task of pulling orders.

It is quite possible the pendulum will swing back the other way... Would you be willing to travel for hours to one of 50 gigawarehouses which stock dozens of variations of every product, and sell them for less because there's no shipping nor pulling costs?

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Re: Amazon....we all have seen this before :)

Post by mmcmonster » Thu May 16, 2019 5:40 pm

boomer_techie wrote:
Thu May 16, 2019 5:12 pm
onourway wrote:
Thu May 16, 2019 9:42 am
Even buying from Amazon direct is no guarantee of quality. Yes, you will get your money back, but Amazon's own warehouses are filled with counterfeit and damaged product. (All of the items we'd purchased were shipped direct from Amazon).
Amazon allows small time sellers to procure their own product, and send it to Amazon for the "fulfilled by Amazon" service. The problem is that Amazon mingles the individual sellers' items with their own procured stock. The result: Instead of product direct from a manufacturer, you might receive an item that previously came from a thrift store, yard sale, fire sale, or is counterfeit.
Agree with the difficulty buying on Amazon.com now. :annoyed We got burnt on a couple electronics and probably won't buy any electronics on the site since I can't tell what's sold by Amazon and what is sold by a reseller.

Have to get a solid state drive soon. Will probably go to a local Best Buy, Walmart, or Target and take my chances, even though Amazon will have better prices.

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Re: Amazon....we all have seen this before :)

Post by DB2 » Thu May 16, 2019 6:12 pm

Valuethinker wrote:
Thu May 16, 2019 12:00 pm
A not-to-be-ignored-factor is the Founder Factor.

WalMart is a classic case of a business that has struggled since its Founder died. Apple has done very well since Steve Jobs died, but it is arguable that it is not as innovative in terms of products as it was under his leadership. Microsoft certainly had strategic issues since Bill Gates stopped running it.

A lot may depend upon Bezos and his restless fear of corporate obsolescence and decline. Constantly hounding Amazon to improve performance and to diversify into new areas .. his famous line about the Kindle Fire phone (roughly "we will have far bigger failures in our corporate history").

If and when Bezos is not running the business, or has his eye off the ball (his divorce will be an important test), then the business may struggle to maintain its momentum. Bloomberg I think did not do as well when Michael Bloomberg was off being Mayor of NYC.

Corporate culture is a thing, and in a Founder-run business it is shaped by the Founder(s), and it's often an important driver of competitive advantage.
Well put.

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Re: Amazon....we all have seen this before :)

Post by Enganerd » Thu May 16, 2019 6:20 pm

Valuethinker wrote:
Thu May 16, 2019 8:39 am
whomever wrote:
Thu May 16, 2019 8:36 am
"how long will Amazon dominate"

I dunno, but for reference: if we steer the olde time machine back to 1975ish, the three giants of American retail were JC Penny, Montgomery Wards, and Sears Roebuck.

If you had invested $10k in Monkey Wards in 1975 ... it went bankrupt around 2001.
If you had invested $10k in JC Penney in 1976 it would be worth $2314 today (vs. $853k if you's picked VFINX instead) (n.b. - that 2341 isn't followed by a 'k')
I dunno about Sears - it was bought by KMart etc, so there isn't just one ticker to follow, but it's on the verge of bankruptcy right now.


I think that 'buy the whole market' seems to work quite a bit better than 'buy the retail behemoths'.
About 2003 that was WalMart, which seemed to conquer all before it, whereas Amazon share price was in a slump where it did not beat its 2000 share price for something like another 13 years.

WalMart has struggled since then. I believe there was a figure that WalMart had more products in its online catalogue than Amazon. But that hasn't helped it.
I hadn't realized walmart has been struggling. Is it in price, profit, or market cap that walmart is showing weakness?

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Re: Amazon....we all have seen this before :)

Post by DonIce » Thu May 16, 2019 6:31 pm

Valuethinker wrote:
Thu May 16, 2019 12:00 pm
A not-to-be-ignored-factor is the Founder Factor.

WalMart is a classic case of a business that has struggled since its Founder died. Apple has done very well since Steve Jobs died, but it is arguable that it is not as innovative in terms of products as it was under his leadership. Microsoft certainly had strategic issues since Bill Gates stopped running it.

A lot may depend upon Bezos and his restless fear of corporate obsolescence and decline. Constantly hounding Amazon to improve performance and to diversify into new areas .. his famous line about the Kindle Fire phone (roughly "we will have far bigger failures in our corporate history").

If and when Bezos is not running the business, or has his eye off the ball (his divorce will be an important test), then the business may struggle to maintain its momentum. Bloomberg I think did not do as well when Michael Bloomberg was off being Mayor of NYC.

Corporate culture is a thing, and in a Founder-run business it is shaped by the Founder(s), and it's often an important driver of competitive advantage.
Agreed. Oftentimes, once a visionary founder is out of the picture and is replaced with a run of the mill MBA running it, companies go from extraordinary to mundane. Although some companies eventually find their footing again. Microsoft is once again the world's #1 company by market cap. It's rare to find someone as capable as the founder of taking their place, because such people are extremely rare, and most of them are probably off founding their own companies, not climbing the exec ladder to eventually become the CEO of an already existing company. Probably one of the more promising things about Amazon is that Bezos is only 55, which means he could easily be running the company for another 20-30 years before death or cognitive decline become likely. Unlike Bill Gates, he seems in no hurry to pass the reins and pursue other interests.

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Re: Amazon....we all have seen this before :)

Post by MrBobcat » Thu May 16, 2019 6:40 pm

bg5 wrote:
Thu May 16, 2019 8:04 am
Hey Gang,

Thoughts on Amazon as it appears that a lot of younger people are jumping on stocks like Amazon in hopes that they hit a grand slam. The stock as of now looks rock solid to me as it has a lot of diversification and in my opinion is not a one trick pony.

With that being said we have all seen stocks like this come and go and those that seem unbeatable are eventually defeated after a certain time period.

The questions I have is.....how long will Amazon dominate????? I think that eventually the government will have to step in and do something but just as everyone else I have no clue :)

Thoughts?
Hopefully long enough for me to get all my accounts transferred to Fidelity so I don't take a bath on commissions selling it. Thanks to this forum I can't unsee the costs of a full service broker nor the benefits of index investing. It's my lone stock holdout and makes up over 16% of my portfolio. Thankfully it's sitting in a Roth account. It's the only 10 bagger I ever bought.

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Re: Amazon....we all have seen this before :)

Post by nisiprius » Thu May 16, 2019 6:44 pm

IBM is an interesting case in point, precisely because it has not collapsed. It is still a huge, profitable corporation.

I don't know I can explain to younger investors just how revered IBM used to be--both as a stock, and as a company.

Here's how IBM stock, with dividends reinvested, has performed, compared to the Vanguard 500 index fund, since inception of the index fund.

Source

Image

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Re: Amazon....we all have seen this before :)

Post by teniralc » Thu May 16, 2019 6:59 pm

mmcmonster wrote:
Thu May 16, 2019 5:40 pm
boomer_techie wrote:
Thu May 16, 2019 5:12 pm
onourway wrote:
Thu May 16, 2019 9:42 am
Even buying from Amazon direct is no guarantee of quality. Yes, you will get your money back, but Amazon's own warehouses are filled with counterfeit and damaged product. (All of the items we'd purchased were shipped direct from Amazon).
Amazon allows small time sellers to procure their own product, and send it to Amazon for the "fulfilled by Amazon" service. The problem is that Amazon mingles the individual sellers' items with their own procured stock. The result: Instead of product direct from a manufacturer, you might receive an item that previously came from a thrift store, yard sale, fire sale, or is counterfeit.
Agree with the difficulty buying on Amazon.com now. :annoyed We got burnt on a couple electronics and probably won't buy any electronics on the site since I can't tell what's sold by Amazon and what is sold by a reseller.

Have to get a solid state drive soon. Will probably go to a local Best Buy, Walmart, or Target and take my chances, even though Amazon will have better prices.
I stopped buying electronic items on Amazon before I even started to give it much conscious thought that things were not was they were not as advertised. I guess I just experienced enough small inconsistencies and read enough questionable reviews. So far, I’ve had good luck with B & H Photo for electronics.

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Re: Amazon....we all have seen this before :)

Post by KyleAAA » Thu May 16, 2019 7:37 pm

Retailers have figured out how to fight back to a certain extent (look at the turnaround Best Buy has pulled off) and they are slowly losing their grip on cloud infrastructure as well, although the market is growing so fast it won't impact revenue growth for quite some time. They will keep growing and the stock will perform well, but I wouldn't expect anything close to what AMZN pulled off over the last 10 years. I also don't think the stock will crash.

RJC
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Re: Amazon....we all have seen this before :)

Post by RJC » Thu May 16, 2019 7:51 pm

Outside of play money, do people really gamble their retirement on individual stocks?

thx1138
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Re: Amazon....we all have seen this before :)

Post by thx1138 » Thu May 16, 2019 8:17 pm

RJC wrote:
Thu May 16, 2019 7:51 pm
Outside of play money, do people really gamble their retirement on individual stocks?
Are you old enough to remember Enron and its 401k?

bradpevans
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Re: Amazon....we all have seen this before :)

Post by bradpevans » Thu May 16, 2019 8:37 pm

RJC wrote:
Thu May 16, 2019 7:51 pm
Outside of play money, do people really gamble their retirement on individual stocks?

Many people, including me, INVEST in individual stocks, what you call gambling

Horses for courses

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JoMoney
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Re: Amazon....we all have seen this before :)

Post by JoMoney » Thu May 16, 2019 9:12 pm

Seen this before... Sears was a major component of the Dow Jones Industrial Average from 1924 to 1999.
Sears Roebuck & Company was founded in 1893. It started as a mail-order catalog company . One of the founders had been a station agent and knew how to ship using the railroads that were now connecting remote areas. Before the Sears catalog, farmers near small rural towns usually purchased supplies from local general stores with narrow selections of goods.
By 1894, the Sears catalog had grown to 322 pages, including many new items such as sewing machines, bicycles, sporting goods, automobiles. By 1895, the company was producing a 532-page catalog. By 1896, dolls, stoves, and groceries had been added to the catalog.
The company went public in 1906, with a stock placement of $40 million ($1.1 billion today).
Brick and mortar retail locations were started in 1925.
Sears began to diversify in the 1930s, creating Allstate Insurance Company in 1931 and placing Allstate representatives in its stores in 1934. Over the decades it established major national brands, such as Kenmore, Craftsman, DieHard, Silvertone, Supertone, and Toughskins. The company became a conglomerate during the mid-20th century, adding Dean Witter and Coldwell Banker real estate in 1981, starting Prodigy as a joint venture with IBM in 1984, and introducing the Discover credit card in 1985.
Sears had the largest domestic revenue of any retailer in the United States until October 1989.
In 1993, Sears announced it was closing its catalog division, bringing to an end a storied era of mail-order bargain-hunting and wish fulfillment that had begun nearly a century earlier. Sears Tower sold in 1994, and the following year, Amazon.com shipped its first book.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

-ryan-
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Re: Amazon....we all have seen this before :)

Post by -ryan- » Thu May 16, 2019 9:16 pm

For my personal retail needs, I've started moving away from Amazon, as have others in my immediate circle of friends and family, for a handful of reasons:

1) Quality of shipping: I have had an unacceptable percentage of products show up damaged.
2) Customer service has not, in my experience, been great.
3) Pricing for many of the products I buy is no longer competitive with smaller retailers.
4) I find it difficult to navigate their site and ensure the I'm ordering the correct product without having a manufacturer's part number.

As for their long term prospects, they may some day become the largest retailer in the U.S., but for now if I can shop with a smaller retailer and receive a better price on a product shipped in more secure packaging, I'll wait an extra day or two for it.

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Re: Amazon....we all have seen this before :)

Post by columbia » Thu May 16, 2019 9:23 pm

On demand delivery is here. If it’s not Amazon, then others will replace that service.

I make no predictions on Amazon’s role in the future.

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Re: Amazon....we all have seen this before :)

Post by Watty » Thu May 16, 2019 9:55 pm

onourway wrote:
Thu May 16, 2019 8:46 am
Amazon has a major problem on their hands with counterfeit products and poor quality control on their inventory. Amazon doesn't appear interested in doing anything about it.
+1

Of all things I ordered a pack of brand name socks from them and the quality was so bad they were obviously counterfeit. The refunded the money and did not even want me to ship them back.

I was just shopping for a hard disk drive for my PC. There were lots of reviews about counterfeit hard drives. What people do is to to get old drives that have been running for several years in a server then try to sell them as new. I ended up ordering the drive from Best Buy.

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warowits
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Re: Amazon....we all have seen this before :)

Post by warowits » Thu May 16, 2019 11:13 pm

whomever wrote:
Thu May 16, 2019 8:36 am
"how long will Amazon dominate"

I dunno, but for reference: if we steer the olde time machine back to 1975ish, the three giants of American retail were JC Penny, Montgomery Wards, and Sears Roebuck.

If you had invested $10k in Monkey Wards in 1975 ... it went bankrupt around 2001.
If you had invested $10k in JC Penney in 1976 it would be worth $2314 today (vs. $853k if you's picked VFINX instead) (n.b. - that 2341 isn't followed by a 'k')
I dunno about Sears - it was bought by KMart etc, so there isn't just one ticker to follow, but it's on the verge of bankruptcy right now.
This is why I worry about corporate America abandoning dividends for share buybacks. I get the argument that you should prefer buybacks, and the only thing that matters is total return, but if a company never pays a dividend and eventually ends in debt and bankruptcy and I just buy and hold forever how am I benefiting from owning that company?

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JoMoney
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Re: Amazon....we all have seen this before :)

Post by JoMoney » Thu May 16, 2019 11:43 pm

warowits wrote:
Thu May 16, 2019 11:13 pm
...if a company never pays a dividend and eventually ends in debt and bankruptcy and I just buy and hold forever how am I benefiting from owning that company?
First, companies do pay dividends, and sometimes that's the appropriate thing to do, so your hypothetical is a moot point.
But anyways, outside of the tax implications you should be indifferent to dividends. If you would reinvest the dividend, the buyback has the same effect... and if you would be spending the dividend you could just as well sell the shares with the buyback supporting the market for the stock as well as having an accretive effect on your stake in the company by reducing the other outstanding shares.
Also, nobody really means "hold forever", you hold until you need the money, and you're holding a diversified portfolio and possibly rebalancing to maintain some constant mix allocation, or even market-weights of a broad cap-weighted index - some stocks will be in decline but new companies are on the rise and gaining in size - you're not concerning yourself with one company, but of the whole market.
Even if a stock never pays a regular dividend, companies are frequently bought out, go private, merged with other companies, or the assets broken up and sold off and have special dividend/distributions paid out, sometimes those are paid out in the form of stock in a new company, sometimes cash, sometimes you get a choice.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Amazon....we all have seen this before :)

Post by RJC » Fri May 17, 2019 7:32 am

bradpevans wrote:
Thu May 16, 2019 8:37 pm
RJC wrote:
Thu May 16, 2019 7:51 pm
Outside of play money, do people really gamble their retirement on individual stocks?

Many people, including me, INVEST in individual stocks, what you call gambling

Horses for courses
I think most folks on this forum would consider buying individual stocks, especially for retirement, a form of gambling. How is it not? At any point, a single company can easily go out of favor, tank or go bankrupt for a number of reasons.
Last edited by RJC on Fri May 17, 2019 7:37 am, edited 1 time in total.

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Re: Amazon....we all have seen this before :)

Post by bungalow10 » Fri May 17, 2019 7:37 am

I canceled my Prime membership. I'm not the only one in my office/friend group doing so.

My money is on grocery store pickup/delivery, not Amazon.

I've been in Amazon warehouses, they are horribly inefficient. They are passing these inefficiencies back to their suppliers, not fixing the problems.

I've hired Amazon engineers and they are not concerned with ROI in their internal design projects.

Granted, all the above applies to a specific industry, but I don't think Amazon is winning.
An elephant for a dime is only a good deal if you need an elephant and have a dime.

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Re: Amazon....we all have seen this before :)

Post by Ged » Sun May 19, 2019 8:10 pm

onourway wrote:
Thu May 16, 2019 9:42 am
Ged wrote:
Thu May 16, 2019 9:14 am
onourway wrote:
Thu May 16, 2019 8:46 am
Amazon has a major problem on their hands with counterfeit products and poor quality control on their inventory.
Yes, Amazon's third party sellers have to be approached with trepidation. Many are shipping product from China to you. Some list counterfeit products under the genuine manufacturer listing. Others have substantially worse return policies.

Unless I have specific knowledge of the vendor I make very sure that when I order something from Amazon it is sold and shipped by Amazon. Otherwise your protections are minimal.
Even buying from Amazon direct is no guarantee of quality. Yes, you will get your money back, but Amazon's own warehouses are filled with counterfeit and damaged product. (All of the items we'd purchased were shipped direct from Amazon).
Amazon offers shipping and warehousing services to third party sellers. Your only real protection is buying from Amazon. Not just getting it shipped by Amazon.

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Re: Amazon....we all have seen this before :)

Post by thoughtware » Sun May 19, 2019 8:35 pm

Love Amazon. They have a significant network and technological infrastructure that will give rise to new products and services we presently can't conceive. In addition to the three fund portfolio, Amazon is the only single stock I own - and have no plans to sell for many years.

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Re: Amazon....we all have seen this before :)

Post by TomCat96 » Sun May 19, 2019 8:40 pm

Valuethinker wrote:
Thu May 16, 2019 12:00 pm
A not-to-be-ignored-factor is the Founder Factor.

WalMart is a classic case of a business that has struggled since its Founder died. Apple has done very well since Steve Jobs died, but it is arguable that it is not as innovative in terms of products as it was under his leadership. Microsoft certainly had strategic issues since Bill Gates stopped running it.

A lot may depend upon Bezos and his restless fear of corporate obsolescence and decline. Constantly hounding Amazon to improve performance and to diversify into new areas .. his famous line about the Kindle Fire phone (roughly "we will have far bigger failures in our corporate history").

If and when Bezos is not running the business, or has his eye off the ball (his divorce will be an important test), then the business may struggle to maintain its momentum. Bloomberg I think did not do as well when Michael Bloomberg was off being Mayor of NYC.

Corporate culture is a thing, and in a Founder-run business it is shaped by the Founder(s), and it's often an important driver of competitive advantage.
+1

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Re: Amazon....we all have seen this before :)

Post by Jags4186 » Sun May 19, 2019 9:00 pm

Valuethinker wrote:
Thu May 16, 2019 12:00 pm
A not-to-be-ignored-factor is the Founder Factor.

WalMart is a classic case of a business that has struggled since its Founder died. Apple has done very well since Steve Jobs died, but it is arguable that it is not as innovative in terms of products as it was under his leadership. Microsoft certainly had strategic issues since Bill Gates stopped running it.

A lot may depend upon Bezos and his restless fear of corporate obsolescence and decline. Constantly hounding Amazon to improve performance and to diversify into new areas .. his famous line about the Kindle Fire phone (roughly "we will have far bigger failures in our corporate history").

If and when Bezos is not running the business, or has his eye off the ball (his divorce will be an important test), then the business may struggle to maintain its momentum. Bloomberg I think did not do as well when Michael Bloomberg was off being Mayor of NYC.

Corporate culture is a thing, and in a Founder-run business it is shaped by the Founder(s), and it's often an important driver of competitive advantage.
In fairness, Walmart has performed on par with the SP500 since Sam Walton died, and both Apple and Microsoft have outperformed the SP500 since Jobs/Gates left.

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Re: Amazon....we all have seen this before :)

Post by cheese_breath » Sun May 19, 2019 9:13 pm

bg5 wrote:
Thu May 16, 2019 8:04 am
The questions I have is.....how long will Amazon dominate?????
In the 1960s the question was... will the government break up General Motors? In 2009 the government saved it from going out of business.
The surest way to know the future is when it becomes the past.

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Re: Amazon....we all have seen this before :)

Post by Dale_G » Mon May 20, 2019 12:37 am

If Amazon doesn't up its bid for my teleportation patent ( 10 second delivery ) in the next 12 hours, they are toast.

Dale
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