Investors should have two goals: to make money on their investments, and to become better investors. To become a better investor one needs to examine how they've done with different stocks, in different segments, and take that information into account. Some investors have shorted Amazon (NASDAQ:AMZN), and are simply refusing to admit that they've lost money. They tell themselves they haven't lost money until they cover, which of course means they're in denial. They're totally convinced the stock price can't be where it is, and they get emotional about it, forgetting that being passionate about a stock always causes one to lose money. Some investors don't even track their losses in AMZN, saying it doesn't matter, only their portfolio's bottom line matters. That would be akin to a retailer not tracking what profits they make on individual items. It's no way to run a business.
It's not hard to track how you've done in an individual stock. Just make a spreadsheet and enter all your buys and sells. If you find yourself losing money in a particular stock, perhaps you should reassess your positions. There's nothing wrong with just admitting that you don't understand a particular stock, and therefore stay away from it. Thinking you're smarter than everyone else can get you into a lot of trouble. In the case of Amazon bears, we have investors who conclude that AMZN is priced too high and must fall. When that doesn't happen, they get mad, come up with conspiracy theories, and insult the intelligence of all the buyers, who, by the way, are making money on AMZN. One thing they DON'T do is ask AMZN longs what is the basis of their thinking. They ask rhetorical questions on the discussion boards, but they tend to be "What idiot would buy this over-priced pig" instead of real questions. I doubled my money in AMZN in 2012, not trading options, but just buying dips and selling spikes. I tell the Amazon bears to read Jeff Bezos' letters to the stockholders.
Have you seen that "motivational poster" titled "Teamwork"? There's a picture of a racing shell and rowers. It says:
Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishment toward organizational objectives. It is the fuel that allows common people to attain uncommon results.
Actually, in the corporate world, teamwork is the ability to avoid any responsibility for the failure of an organization's project and put the blame on someone else, often the guy who died or left the company. If I could draw, I'd draw on that poster a guy with an outboard motor telling the rowers to get out of the boat.
At other companies, everyone pretends to respect each other's ideas and efforts. The main thing is to not upset the team or management. If you point out that the company is doing something wrong, you're not a team player, even (especially) if you're right. At Amazon, there's one man in charge, Jeff Bezos, and everyone knows it. He can do whatever he wants and he won't get fired. The stock might get hammered, but he doesn't care.
Apple (OTC:APPL) made their mark by charging as much as they could for their products, to maximize current margins. Amazon does just the opposite: they charge as little as they can to maximize their customer base and their customers' experience.
There are other ways Amazon is different. They don't try to run their competition out of business. Their most direct competitor for the kindle reader is the Nook by Barnes & Noble (NYSE:BKS). Amazon might have bought BKS to eliminate the Nook, but they didn't.
The battle for the future is being fought on the internet. That battle includes:
1) On-line retail
2) Video content, movies, tv shows
5) Cloud computing
With on-line retail, Amazon faces competition from Walmart (NYSE:WMT), Overstock.com (NASDAQ:OSTK) and eBay (NASDAQ:EBAY). With each passing day it's becoming more difficult to compete with Amazon. Walmart can deliver quickly with their ship-to-store program, but Amazon is the only player even trying to dominate online retail. They've concluded that customers want fast delivery, so they've undergone a massive deployment of fulfillment centers, along with a robot company to make those fulfillment centers as efficient as possible. Only Walmart has the infrastructure to deliver products nation-wide, not to the customer's door, but to a nearby Walmart store.
Amazon is aggressively going after video content. They're spending as much as they have available on movies and tv shows. It seems that every day I'm able to watch more movies for free with my Amazon Prime membership. They're also producing their own movies. NetFlix (NASDAQ:NFLX) is backing off on acquiring content, and making more (short-term) profit as a result, but that's no way to win in the long run.
With Amazon's recently announced "auto-rip" feature, it doesn't make sense to buy a music cd from anyone besides Amazon. Buyers have an MP3 version of every cd they buy past, present, or future, stored in Amazon's cloud. They're going after the music business.
Amazon is poised to dominate the future of publishing. They make it much more attractive for authors to publish with Amazon than anyone else. As time goes on, we'll have more and more of the leading authors being published by Amazon. Stephen King recently published "Guns" on Amazon, and it's only available on Amazon. The publishing industry is changing, and it's Amazon who is doing the changing.
Amazon first came up with cloud computing. It happened because they over-bought their own infra-structure so that during the Christmas rush their servers wouldn't go down. They decided that with all that excess infra-structure, they should be able to rent it out when they didn't need it. Thus the birth of cloud computing. They were the first, they're the biggest, and they're pricing it so low it's difficult for other players to get a foothold.
Some Amazon detractors say if you want to invest in on-line retail, buy eBay, if you want to invest in video content, buy NetFlix, etc. What they miss is the synergy all these businesses produce. When you're an Amazon Prime member, you get free 2 day shipping and thousands of free tv shows and movies. Not everyone will become an Amazon Prime member, but a large percentage of the people will. When I shop on Amazon for something expensive, I check other sites to compare prices. Often the other sites have the product at the same price, but the real difference is shipping time. Amazon ships stuff free in 2 days, the other guys don't.
In conclusion, Amazon is headed by the best living CEO in America. Jeff Bezos is 49, and he's going to accomplish a lot in the next 10 years. He can look at the big picture, and take a long term view, while other CEOs have to worry about keeping stockholders and analysts happy in the short run. This is why AMZN will continue to rise over the next 10 years. Of course we'll have pull-backs and run-ups, but the trend will be up.
Disclosure: I am long AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.