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The Market is Never Wrong

|Includes: Amazon.com, Inc. (AMZN)

Hi everyone --

I bought some puts on AMZN yesterday ($150 Nov), thinking maybe AMZN and the market had run a bit too far, and we might consolidate a little.  So what happens today?  JPM upped their estimates and target price, and the stock is running higher.

http://blogs.barrons.com/techtraderdaily/2010/09/24/amazon-jp-morgan-boosts-estimates-raises-target-to-198/?mod=yahoobarrons

Am I going to panic and throw in the towel?  Not yet.  Mostly because even though the Market is Never Wrong, I still believe AMZN has run too far and will come back to me.  JPM is assuming accelerating growth, but the rest of the Street is thinking the longer term growth is closer to 26%.  This is very healthy growth, no doubt.  But as I type this, AMZN is trading 45x its 2011 average earnings estimate. Somebody's got it wrong, and if AMZN so much as blinks before November 19th, we could have a major correction (Expectations are Everything).  In the meantime, I have tied up a very small part of my net worth on these options and can weather the move up.  So we'll see.

mfergusonus

Disclosure: Long AMZN puts