Amazon (AMZN) stock is up about 10% after hours. Before the earnings report AMZN constituted 6.4% of my portfolio (brokerage account total). While I don't generally get ecstatic over such moves, I am glad to own AMZN.
My portfolio is a small one, and since I have no more than 15 years left in the markets, I have devised a strategy based on:
* A package of growth stocks;
* A group of growth-value stocks;
* A solid complement of pure dividend plays;
* Holding a single speculative stock at a time (ARWR);
* Sector diversification across the tech, consumer, energy, health care and REIT spaces.
I don't hold much cash. Currently my cash percentage is 10%, with a bit of cash in bank accounts and a single bond. I don't have much 'dry powder,' but enough to add small amounts during any correction.
AMZN joins AAPL, MSFT, ET, CVS, V, NRZ and STWD as stocks that are at least 6% of my portfolio (AAPL being first at over 11%). Along with AAPL, MSFT and AVGO (a new holding), AMZN is a top tech name (see: AWS). With CVS, it is also a retail play and a sector-crossing stock.
That's my first bullet. The company fits my portfolio strategy, built for someone who is tracking behind many successful SA-linked investors. My goal is not to catch any of these folks, but to build my net worth to an amount that I hope to realise within five years or so.
Now to Bullet #2: leadership. Jeff Bezos is a genius CEO. He had the vision to first create an online bookstore in the 90s, and then leverage that platform to online sales across more and more categories. Today, you can buy just about anything from Amazon at a reasonable price and have it shipped quickly to a chosen destination.
Bezos' strategy goes beyond the online specialty-to-online mass retail phases. He and his team have built Amazon's Cloud service (AWS) to provide the technical guts of the online transactions and to supply the first and leading Cloud-configuration resource to an increasingly hungry Cloud market. And that success is not fundamentally affected by MSFT's success in Cloud, as AWS quarterly growth results indicate.
Nor does Amazon's vision end there, as it as adopted a Costco-similar strategy through its Prime membership to hook in many millions of customers. These subscribers gain meaningful discounts on the assumption that they will buy regularly from Amazon - AWS, online retail products and Whole Foods. Amazon may soon be a generic shipping source, and who knows what else?
So we are already on to the third bullet - customer base and loyalty. While Costco's subscribers may like COST more than Prime members do Amazon (an educated guess), loyalty is not the same as affection. It is about return and new customers, all of whom drive sales and profits for and to the business.
Some people don't like Jeff Bezos. Some don't care for certain Amazon business practices, which may appear to resemble those of the Fox bookstore chain in "You've Got Mail" with Tom Hanks and Meg Ryan. Amazon is not warm and fuzzy, and is clearly impatient with its own employees and production levels and speeds. In package delivery, this can even be expressed in public safety issues. While I won't buy BA until its MAX issue is resolved, I don't see AMZN as leaking into that dubious zone. If it does, I may review.
Today is a good day for to hold AMZN and a good day for my portfolio as well.
Disclosure: I am/we are long AMZN.
Additional disclosure: Also long ARWR.