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Land of Milk and Honey

Land of Milk and Honey
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  • How I Explain Amazon's Stock Performance [View article]
    I know an IBM business unit that felt that way about Walmart a while back - completely dictated to and without a choice. Money does and can rule. Business monopolies are a problem for a reason. Money and those with it can influence a lot more than business. If you don't like my terminology... then learn to read with more of an open mind to wording... and answer to the concepts mentioned instead of insulting.

    Your post gets my vote for nonsense post of the day. You knew what I meant... but found an opening to go for an insult instead.
    Feb 25, 2014. 06:42 PM | 3 Likes Like |Link to Comment
  • How I Explain Amazon's Stock Performance [View article]
    Which is why I've avoided Amazon for most purchases. Great place to check reviews. I don't want to be part of monopoly building, stripping "the landscape", and the sense of dictatorship that comes with that.

    It's often available elsewhere at similar enough prices, or less. With more hands on sense of who and where I'm buying from, both online and b&m.

    Also in the past, haven't such endeavors eventually failed? With the model losing out somehow as people flock elsewhere? I can't think of instances, but on a gut level that seems true. Also it's very Bezos dependent. So if he's gone (for whatever reason), so's the model.
    Feb 25, 2014. 05:44 PM | Likes Like |Link to Comment
  • How I Explain Amazon's Stock Performance [View article]
    Great article!

    I get it. It's a penny stock (that doesn't cost a penny) looking for a turn around story. It was profitable and priced high accordingly. Now it's run up on hope that it's prior success & hold over cash flow from those sales models & it's "new model", will be profitable again. It would seem likely & probable, if the released reports clearly outlined how it plans to get there. Instead the plan is kept under wraps. So it's betting purely on hope that the success of the prior business model, will be repeated in a totally new model.

    I noticed as a customer a change just a couple years back, from a company to check out if you wanted a good price on a pain in the neck, or hard to find item or other diverse but limited choices... to a place that sells downright everything. It makes sense to make profit on selected items, selected because they can make a profit, even if they are a diverse lot. That change to "everything" forces inclusion of not so profitable items too. Many of them. I have only my sense of that change, so I'd wonder if others noticed it too?

    On efficient market theory, as a newbie.. my thought was "how silly is that?" Obviously the market is reactive & the collective set of people can not, and do not, have (or have & do not use) a perfect set of extensive information on every company, in which to price them perfectly. Plus black swan events, & pure humanness that influences decisions of CEOs, etc. that rapidly change valuations that are accurately set. The theory sounded to me like the theoretical part of the lesson. Then day 2, you test it with application & see how it works in reality. That part of the school textbook was always a fun read!
    Nov 7, 2013. 01:08 AM | 1 Like Like |Link to Comment
  • Amazon And The 'Profitless Business Model' Fallacy [View article]
    @ Andrei

    Yep... or disclosed some reason why it's helpful not to, for instance "so that competition doesn't know." It's a hole. They've apparently not done anything to fill it, even indirectly.
    Nov 5, 2013. 05:07 PM | Likes Like |Link to Comment
  • Amazon And The 'Profitless Business Model' Fallacy [View article]
    Enron, etc, is a very logical reminder that if your DD turns up unclear info, and stuff is hidden... not to give it an automatic free pass and to very possibly move on. Since the macro topic of discussion in these comments, is whether to go long Amazon, this reminder on Amazon's non-transparency is exactly on target.

    The argument made wasn't that hiding means something is rotten. The argument made was that if net profit margins are down, then something is not good.

    Same as the argument wasn't whether CEOs have rights to not share stuff. Of course they do. It's whether transparency is something investors have rights to expect, and hiding things is something investors have rights to be cautious over. If other companies can be transparent, then investors have rights to expect transparency before giving confidence to a CEO.

    Changing the arguments and discussion away from the points made, loses the chance to discuss what the non-transparency itself means, and therefore how to weigh it when deciding whether to invest. What does the non-transparency mean in this case?
    Nov 5, 2013. 11:09 AM | 1 Like Like |Link to Comment
  • Amazon And The 'Profitless Business Model' Fallacy [View article]

    Used books always seem to be cheapest from Amazon. They also always seem to have whatever I need, that's harder to track down (like a tea I like). I don't spend enough (anywhere) to have noticed if they're generally a good source or not.

    The merchant fees make me wonder how the business will last. They are a very high percent. Easily 1/3% of sale price. The profit margin on a lot of merchandise for retail is only 1/2 of sale price. So that leaves not much profit for the seller. I've known businesses that opted not to do Amazon. Ebay is pricy too, and it's hurt them, with Craigslist being a first stop for a lot of sellers of personal junk. At some point, someone will develop the software to replicate Amazon's online marketplace idea, without using the high fees. ("Sometime" isn't now though yet.)
    Nov 3, 2013. 10:08 AM | Likes Like |Link to Comment
  • Amazon And The 'Profitless Business Model' Fallacy [View article]
    Great article. Lays out the arguments in both directions, which will save me much time reading articles to figure this out.

    Bottomline, so Amazon isn't profitable. The leadership's decision is to use the profits to take over the world. So it's not a solid investment. It's speculation in a run up game for "someday." Neither side's arguments for why it's not profitable (whichever argument may be right), undo this bottomline problem. I tend to agree with a lot of commenters that good leadership expands in a way that gives good profitability ALL along the way. This shows a management weakness if it's not profitable "by choice", and a business model weakness if it's from lack of choice. Either way -- not solid.

    The comments clarified though for me -- Amazon stock did poorly during the crash due to it's "riskier" business model, while it still was selling well & not yet "expanding" until there were no profits. That explains the runup and excitement about it. It's stock had gone down further than traditional companies, so it showed a good rise. That in turn leads to speculation that keeps it up... even with it's new current model of investing without producing profits along the way.

    Will it become profitable again soon? All I have to decide is if I want to speculate on this company. But it's not investing. It's STILL speculating, even with this explanation. That's the bottomline. (Speculating that the management is guessing right on how to grow the company, that the management will decide someday to shift back to profitable & not move to some new adventure...)

    Bill Gates & Microsoft were going to take over the world too. They're still kicking, but there's definite cracks in that philosophy's chances of working. And they stayed profitable all during.

    I'd agree too, with the commenter that the more Amazon is using physical properties in it's business, the more it brings brick & mortar type costing, into it's business. Also, lack of clarity is never a good sign.
    Oct 29, 2013. 07:26 AM | 1 Like Like |Link to Comment
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