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  • 3 Stocks You Shouldn't Sell [View article]
    Thank you for the article.

    RE: Amazon

    Even if you add back in the entire R&D cost from last year of $4.5Billion, it still makes it a stock that is selling for 27 times earnings. Hardly fairly valued.

    In addition, no company EVER eliminates Cap Ex spending entirely. Everyone has to keep expanding and developing their business so that growth can still come in the future.

    Any way you cut this, it is still drastically overpriced. Yes, it still has potential for growth, but what kind of growth is it? It has to spend more to make less on a margin basis. In addition, they don't include the cost of their shipping as part of their gross margin which deceptively shows a higher gross margin.

    Thanks again for the comments. Sorry I focused solely on Amazon.
    Apr 15, 2013. 04:10 PM | 2 Likes Like |Link to Comment
  • The 'Amazon Law' Is The Signal To Sell Far Overpriced Amazon [View article]
    You are 100% correct Turk. Shorting, if you have a long term approach and can weather it financially, will likely work out for someone on AMZN if they shorted anywhere above $100 per share. However, you have to have the stomach to be down a lot of money. I don't mind shorting more as the stock price goes higher. But I am also a long term investor who doesn't care what my shorting options are worth at any given time. What I do know is that Amazon is not a $250+ stock and is definitely below $100...it will just take time before the market adjusts.

    When the bulls are raging, it's hard to make money on shorting. I think we are at the tail end of a cyclical bull, so that should help AMZN collapse soon...at least I hope. :)
    Mar 22, 2013. 06:08 PM | 2 Likes Like |Link to Comment
  • The 'Amazon Law' Is The Signal To Sell Far Overpriced Amazon [View article]
    HA! oh. Look at how closely I read that part. I tend to skim over forward earnings. I never understood the point of them since they are usually wrong anyhow. :)

    Sorry about that guys. My mistake. Either way, even at forward looking optimistic earnings, it's still terrible. Sigh. One of these days, the shiny alluring stock will lose its luster.
    Mar 22, 2013. 03:26 PM | 2 Likes Like |Link to Comment
  • The 'Amazon Law' Is The Signal To Sell Far Overpriced Amazon [View article]
    Dave Dierking: Where did you get a 70 P/E from?!?!? It's way higher than that, even stabilized, based on past year's performances. It's in the 200+ range. Their best year was $2.50 per share in earnings, which still makes it a 100+ PE. And that's based on its BEST year.
    Mar 22, 2013. 02:56 PM | 2 Likes Like |Link to Comment
  • Cash Is King, Yet Everyone Hates It - And It's Driving Every Asset Class Too High [View article]
    Marty, thanks for the comment.

    You are right. That is true, but remember, taxes are bad, but so is a big drop in the market. You DO have to consider taxes, but remember, if your basis isn't very small, which it likely isn't due to the sideways market over the past 13 years, then there are probably not much in terms of taxable gains. So that tax issue isn't really a big reason to sell.

    But let's say your basis is very low, you bought in the late 80s or early 90s. If your basis is 40% of your value, right now, you are still looking at an 18%-22% tax of your overall value. I think this market could definitely see a bigger drop than 18-22%. Then really, the tax isn't as bad to pay. And if the market drops 20% or so, and your basis is 40% lower than today's values, you will still have the tax burden AFTER the drop.

    You did bring up a great point.
    Mar 22, 2013. 01:38 PM | Likes Like |Link to Comment
  • The 'Amazon Law' Is The Signal To Sell Far Overpriced Amazon [View article]
    I am a short on Amazon. I shorted at $257.78 so just recently went into the positive on it. I am a believer than it is a $30 stock, at best, based on reasonable valuations.

    Thanks for the comments. It's truly NOT a hard thing to understand, but so many people are caught in the euphoria of how great the company or Jeff Bezos is. My response is always, "if they're so great, why don't they make money?" And the response is "because they are growing!" Google made PLENTY of money while growing tremendously. Microsoft. Dell. All these major companies did the same thing.
    Mar 22, 2013. 01:15 PM | 14 Likes Like |Link to Comment
  • Cash Is King, Yet Everyone Hates It - And It's Driving Every Asset Class Too High [View article]
    Thanks King of Pain!
    Mar 21, 2013. 06:41 PM | Likes Like |Link to Comment
  • Cash Is King, Yet Everyone Hates It - And It's Driving Every Asset Class Too High [View article]
    Buyandhold,

    I think that's a great strategy. I actually did NOT do this entirely but I think that's one that I will be doing as long as the company's are still operating the same way I had hoped and earnings and revenues are increasing. No reason to sell a company just because the stock has sky-rocketed as long as it's a good company. The same as it going down, going up should be treated the same way. I wouldn't sell merely because the stock price is going down, so instead of timing the market, just hold good companies and sell the ones that are not good. Easier said than done, but very possible and smart.

    Thanks for the comment.
    Mar 21, 2013. 02:09 PM | Likes Like |Link to Comment
  • Cash Is King, Yet Everyone Hates It - And It's Driving Every Asset Class Too High [View article]
    I agree! Thanks for the comment. Many people can understand buffett and graham's philosophy but the discipline is what makes it hard to replicate.
    Mar 21, 2013. 12:12 PM | Likes Like |Link to Comment
  • The U.S. Housing Bubble Is Back [View article]
    Enigaman, Again, this is like comparing stock valuations today to stock valuations in 1999. Of course stocks look cheap today becuase prices were ridiculous in 1999. Houses are still expensive today after such a big drop because, relative to income, houses are still expensive.

    Also, bubbles occur WHEN it becomes a seller's market and not a buyer's market. That's exactly what happens...buyer demand outweighs seller supply.
    Mar 19, 2013. 03:32 PM | 7 Likes Like |Link to Comment
  • The U.S. Housing Bubble Is Back [View article]
    I would agree to all of that. but you can get that info just by doing some research on the internet in the area. Or by scheduling to see houses and see what is going on.

    I am a real estate guy...I own 825 houses and apartments and the one thing I laugh at is when a broker/realtor tries to pitch me on a project. They just want to get paid. I don't blame them! But they can't blame me when I don't listen to them because of their bias.
    Mar 19, 2013. 10:45 AM | 11 Likes Like |Link to Comment
  • The U.S. Housing Bubble Is Back [View article]
    If I wanted to understand the current housing market, the LAST person I would call is a realtor. They are not market savvy. They are quite the opposite. They make money off of higher prices...when is that understanding markets? The next thing you are going to tell me is that I should call a commission based stock broker to ask if I should buy stocks or sit on cash.
    Mar 19, 2013. 08:07 AM | 81 Likes Like |Link to Comment
  • Amazon Is Cheaper Than You Think [View article]
    Josh, you are right. Nobody knows. I don't think it will be 10 years though. The cycle on bubbles and overvalued stocks is usually not 10 years. How long is it? I don't know the exactly number, but these heightened levels don't stay around for long. The next bear market will help bring it back to reality.
    Mar 18, 2013. 09:52 AM | Likes Like |Link to Comment
  • Amazon Is Cheaper Than You Think [View article]
    Thanks Josh.

    What would you consider a reasonable cash flow multiple? And even if you say Amazon doesn't have any real competitors, as a stock, it has competition of reasonably valued companies. Even if the companies are not in the same arena, I would rather own Wal-Mart or Target than Amazon, as a stock.

    Thanks again!
    Mar 17, 2013. 06:47 PM | Likes Like |Link to Comment
  • Amazon Is Cheaper Than You Think [View article]
    Thanks for the post. What do companies in this market trade for on a multiple of operating cash flow? WMT is at 9.4, Target is at 8.2. I think looking at Amazon now versus historical is a very dangerous thing to do. That's like saying that stocks today are undervalued because they are only selling at 18 times earning when back in 1999, they were at 40 times earnings.

    Even if you are correct that the P/E isn't as relevant as operating cash flow multiple, you have to compare to others in the industry. To me, Walmart and Target are as close as you will get and those will be hard because they are brick and mortar. But shouldn't Amazon, since it is supposedly not brick and mortar, being that much better with their overall profit margin? Yet they aren't.

    Amazon is an overpriced company any way you look at it. Maybe one method shows it is less overpriced than another, but it is still very dangerous.
    Mar 17, 2013. 05:17 PM | 6 Likes Like |Link to Comment
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