The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: GOFU on March 15, 2018, 09:56:23 AM
-
22 shares of Amazon with a total cost basis of $5k. As of today they are worth $35k.
So a nice enough gain. Better than a poke in the eye with a sharp stick.
Without considering LTCG on the Amazon sale for the moment, should I sell the Amazon shares and buy index funds? Or is there a better path?
From an investment perspective what criteria would you use to evaluate the options and decide?
-
I'd sell and put the money in index funds personally. What do you have your other assets in?
I'm not sure what's the best way to go about doing that tax-wise, though.
-
I'd sell and put the money in index funds personally. What do you have your other assets in?
I'm not sure what's the best way to go about doing that tax-wise, though.
Why would you sell? How did you reach your conclusion?
My dilemma is one of take the money and run, or hang in there with Amazon. I really am interested in analysis and insight as to how to decide.
Just for sake of hypothetical discussion let's say $1 million portfolio, 85/15, everything except Amazon is index funds.
-
I'd sell and put the money in index funds personally. What do you have your other assets in?
I'm not sure what's the best way to go about doing that tax-wise, though.
Why would you sell? How did you reach your conclusion?
My dilemma is one of take the money and run, or hang in there with Amazon. I really am interested in analysis and insight as to how to decide.
Just for sake of hypothetical discussion let's say $1 million portfolio, 85/15, everything except Amazon is index funds.
Would you buy it today at the current valuation?
-
Ideally you have a reason for your initial Amazon investment that is or no longer is true. For example, you thought cloud computing was the next best thing, and Amazon would benefit from it. Now Amazon, Google, IBM, and others offer cloud computing services, so it's recognized as the next best thing, and fully priced into the stock.
I'm not comfortable valuing Amazon, so I would sell it off and put it in index funds.
Two thoughts
1) Price matters: You can have a successful technology that makes a lousy investment (like airlines since the 1920's).
2) Amazon's price to earnings ratio of 346.37 is really high. There are 2 ways Amazon's PE can return to normal, one is their earnings goes up 10x, another is their stock goes down.
-
Would you buy it today at the current valuation?
No I would not. But then again I no longer buy individual stocks. Amazon is a last vestige of the days when I thought I was clever.
Ideally you have a reason for your initial Amazon investment that is or no longer is true.
Now you're just making me feel foolish. I did not have a good reason, at least none that I can remember. As far as I can remember it was a feeling, i.e., a wild ass guess. Maybe that weighs in favor of cashing out.
From my ability to research, it seems almost all analysts are bullish on Amazon with a target price of $1,670, compared with today's close of $1,582 (down about $9 today). Even at that bullish analyst price, though, I am only looking at another couple thousand bucks of gains if it gets that high.
-
Honestly I think the real question here is do you really want to hold AMZN?
As you know the market always goes up, and while AMZN is not the market, it is (in my opinion) a strong company with more potential and I don't see it falling out of favor any time soon. (Does not mean it won't crash with the rest of the market though!) That being said, it is definitely a premium priced stock.
I think the fact that you would not buy it today, along with the fact your investing in index's mean you should either sell it all, or over the course of a year (or more) sell off small portions and take the gains, investing those in your chosen index(s).
As for the analysts. Ignore them. They could be right, they could be wrong, but either way they are happy to tell fools what price they hit on the dart board today! (or last week for that matter!)
-
You can always split the difference; sell half, get your capital back plus some profit and invest that in a 'safe' investment. Let the other half ride--you're now playing with the houses' money.
-
Honestly I think the real question here is do you really want to hold AMZN?
As you know the market always goes up, and while AMZN is not the market, it is (in my opinion) a strong company with more potential and I don't see it falling out of favor any time soon. (Does not mean it won't crash with the rest of the market though!) That being said, it is definitely a premium priced stock.
I think the fact that you would not buy it today, along with the fact your investing in index's mean you should either sell it all, or over the course of a year (or more) sell off small portions and take the gains, investing those in your chosen index(s).
As for the analysts. Ignore them. They could be right, they could be wrong, but either way they are happy to tell fools what price they hit on the dart board today! (or last week for that matter!)
That's what I am trying to decide, if I want to hold the stock or take the gains now. I only want to hold it if doing so will make me more money. I don't have any particular feelings for or against Amazon. I am on the fence about whether I am risking too much by trying to hold on and squeeze out more share price increase. Perhaps I need to decide at what price I have made enough and will exit. But I don't want to be kicking myself if I sell and in a year if the share price skyrockets. The age-old conundrum.
As for analysts, I don't usually pay attention but the consensus here is pretty overwhelming which is why I am paying attention to it on this one.
You can always split the difference; sell half, get your capital back plus some profit and invest that in a 'safe' investment. Let the other half ride--you're now playing with the houses' money.
I understand what you are saying with this, but when the money is on my side of the table it is no longer house money, to me it's my money just as much as the original investment. It's all a gamble so maybe hedging with a partial move as you suggest is the way to go.
Thanks for the input.
-
Would you buy it today at the current valuation?
No I would not. But then again I no longer buy individual stocks. Amazon is a last vestige of the days when I thought I was clever.
Ideally you have a reason for your initial Amazon investment that is or no longer is true.
Now you're just making me feel foolish. I did not have a good reason, at least none that I can remember. As far as I can remember it was a feeling, i.e., a wild ass guess. Maybe that weighs in favor of cashing out.
From my ability to research, it seems almost all analysts are bullish on Amazon with a target price of $1,670, compared with today's close of $1,582 (down about $9 today). Even at that bullish analyst price, though, I am only looking at another couple thousand bucks of gains if it gets that high.
Do this at the very minimum.
You can always split the difference; sell half, get your capital back plus some profit and invest that in a 'safe' investment. Let the other half ride--you're now playing with the houses' money.
Otherwise, take your insanely awesome profit and consider it a bullet dodged/painless lesson learned. :)
-
I think in fifteen years, when AMZN is at BRK levels, when Macy's, Target, Walmart, Kroger, Best Buy and Sears have all gone the way of Toys R Us, that no one will understand how anyone could have sold their AMZN in 2018.
-
That's what I am trying to decide, if I want to hold the stock or take the gains now. I only want to hold it if doing so will make me more money. I don't have any particular feelings for or against Amazon. I am on the fence about whether I am risking too much by trying to hold on and squeeze out more share price increase. Perhaps I need to decide at what price I have made enough and will exit. But I don't want to be kicking myself if I sell and in a year if the share price skyrockets. The age-old conundrum.
As for analysts, I don't usually pay attention but the consensus here is pretty overwhelming which is why I am paying attention to it on this one.
I think you misunderstood. (That or I am completely too cryptic!)
It's a question of Hold or Sell. If tomorrow the stock market went flat as a pancake, would you hold AMZN? If the market fell like a rock would you hold AMZN? We know your original plan was "Oh hey lets buy this!" with no exit strategy other then the very common "Oh Shit" approach. So I am not asking if you would sell it, or buy more I am asking do YOU feel like your buy is worth the risk to hold on to it? (And yes that isn't something we can answer!)
I think the answer your getting from pretty much everyone is Sell, in some form or fashion(Sell it whole, Sell piece wise, puts, etc) and given the crowd of this form, that is what I would expect. So it's no longer a question of what should you do, it's a question of what you WANT to do. Cause you've been here a bit seen and read enough you should have already know the response you were going to get. The better path here is always going to be buy an Index.
Whatever you decide, will be the right decision for you. Good luck!
-
I’ll throw in another vote for sell. An individual stock is wildly unpredictable no matter how solid one thinks the company may be. Do you trade individual equities for a living? If not, sell it, take your gains, put them into VTSAX or similar. Prefer the mathematical approach here.
-
I think in fifteen years, when AMZN is at BRK levels, when Macy's, Target, Walmart, Kroger, Best Buy and Sears have all gone the way of Toys R Us, that no one will understand how anyone could have sold their AMZN in 2018.
You could be right, or AMZN could go the way of Polaroid because they've overextended so much. Personally, I believe that in 20 years, Facebook, Amazon, Google and Tesla will all be gone.
-
I think in fifteen years, when AMZN is at BRK levels......
BRK is precisely the comparison example that keeps me holding on to AMZN after getting out of all other individual stocks. I considered buying BRK back in the mid-90s, after reading a bunch of stuff including a collection of Buffett's annual shareholder meeting speeches. But I didn't do it. And now when I look at the BRK share price I want to cry. (OK, not really "cry" cry, but you know what I mean. OK, I lied right there, I actually do want to "cry" cry.)
Now that @Kyle B has jogged my memory, I remember that was in fact my motivation for buying AMZN. Because I thought it had the distinct possibility to go the way of BRK and I didn't want to miss the boat a second time.
@stimepy Thanks for the additional response. If AMZN or the market as a whole tanked tomorrow hold would be the only option because there would be no gains to harvest. So I would hold and wait for it to come back. The market on the whole, of course, would come back over time as it always has. Whether any individual stock would come back, including AMZN, is a more open question. Which is what creates the dilemma. I actually have something to lose now that could potentially be a permanent loss instead of the on-paper-only "losses" that one suffers periodically with the buy and hold index fund approach.
-
I think in fifteen years, when AMZN is at BRK levels......
BRK is precisely the comparison example that keeps me holding on to AMZN after getting out of all other individual stocks. I considered buying BRK back in the mid-90s, after reading a bunch of stuff including a collection of Buffett's annual shareholder meeting speeches. But I didn't do it. And now when I look at the BRK share price I want to cry. (OK, not really "cry" cry, but you know what I mean. OK, I lied right there, I actually do want to "cry" cry.)
Now that @Kyle B has jogged my memory, I remember that was in fact my motivation for buying AMZN. Because I thought it had the distinct possibility to go the way of BRK and I didn't want to miss the boat a second time.
@stimepy Thanks for the additional response. If AMZN or the market as a whole tanked tomorrow hold would be the only option because there would be no gains to harvest. So I would hold and wait for it to come back. The market on the whole, of course, would come back over time as it always has. Whether any individual stock would come back, including AMZN, is a more open question. Which is what creates the dilemma. I actually have something to lose now that could potentially be a permanent loss instead of the on-paper-only "losses" that one suffers periodically with the buy and hold index fund approach.
How much Amazon do you hold as a percentage of your overall net worth?
-
How much Amazon do you hold as a percentage of your overall net worth?
For purposes of discussion let's say 3%.
-
How much Amazon do you hold as a percentage of your overall net worth?
For purposes of discussion let's say 3%.
OK, I wouldn't particularly stress over a 3% allocation. I mean, I don't do individual stocks, but it's also not a huge deal at that level. Yes, we're talking about a large sum of money in absolute terms, but 3% allocation in an otherwise (assumed) mustachian portfolio isn't a huge deal.
-
I think in fifteen years, when AMZN is at BRK levels, when Macy's, Target, Walmart, Kroger, Best Buy and Sears have all gone the way of Toys R Us, that no one will understand how anyone could have sold their AMZN in 2018.
What do you mean 'at BRK levels'? AMZN's market capitalization is already 48% higher than BRK. Do you mean trading for $300,000 per share? If so, are the sales of the companies you listed enough to increase Amazon's sales 200 times over? Once Amazon cannibalizes those companies, will it still command a Price to Sales ratio of 4 instead of a more typical 0.5 or 0.2?
-
I think in fifteen years, when AMZN is at BRK levels, when Macy's, Target, Walmart, Kroger, Best Buy and Sears have all gone the way of Toys R Us, that no one will understand how anyone could have sold their AMZN in 2018.
What do you mean 'at BRK levels'? AMZN's market capitalization is already 48% higher than BRK. Do you mean trading for $300,000 per share? If so, are the sales of the companies you listed enough to increase Amazon's sales 200 times over? Once Amazon cannibalizes those companies, will it still command a Price to Sales ratio of 4 instead of a more typical 0.5 or 0.2?
BRK is effectively a mutual fund at this point. We can argue whether Amazon could be considered in a similar light, but I don't personally think it's a fair comparison.
Yes, Amazon has a diverse income picture, but nothing close to BRK.
-
What do you mean 'at BRK levels'? AMZN's market capitalization is already 48% higher than BRK. Do you mean trading for $300,000 per share? If so, are the sales of the companies you listed enough to increase Amazon's sales 200 times over? Once Amazon cannibalizes those companies, will it still command a Price to Sales ratio of 4 instead of a more typical 0.5 or 0.2?
I guess you should short Amazon asap. I'll hodl, thanks.
https://www.ben-evans.com/benedictevans/2014/9/4/why-amazon-has-no-profits-and-why-it-works
-
You can always split the difference; sell half, get your capital back plus some profit and invest that in a 'safe' investment. Let the other half ride--you're now playing with the houses' money.
This is advice I frequently hear on CNBC, especially from Cramer. They refer to it as “taking some chips off the table.”
-
I think in fifteen years, when AMZN is at BRK levels, when Macy's, Target, Walmart, Kroger, Best Buy and Sears have all gone the way of Toys R Us, that no one will understand how anyone could have sold their AMZN in 2018.
What do you mean 'at BRK levels'? AMZN's market capitalization is already 48% higher than BRK. Do you mean trading for $300,000 per share? If so, are the sales of the companies you listed enough to increase Amazon's sales 200 times over? Once Amazon cannibalizes those companies, will it still command a Price to Sales ratio of 4 instead of a more typical 0.5 or 0.2?
+1
Compare market caps of AMZN and BRK.A
-
How much Amazon do you hold as a percentage of your overall net worth?
For purposes of discussion let's say 3%.
OK, I wouldn't particularly stress over a 3% allocation. I mean, I don't do individual stocks, but it's also not a huge deal at that level. Yes, we're talking about a large sum of money in absolute terms, but 3% allocation in an otherwise (assumed) mustachian portfolio isn't a huge deal.
I agree. A 3% allocation takes you off the line of peak portfolio efficiency only a tiny bit. Commissions and capital gains taxes would eat up most of the benefit from trading those funds into an index. Maybe just plan to sell this holding first when you enter retirement.
-
22 shares of Amazon with a total cost basis of $5k. As of today they are worth $35k.
So a nice enough gain. Better than a poke in the eye with a sharp stick.
Without considering LTCG on the Amazon sale for the moment, should I sell the Amazon shares and buy index funds? Or is there a better path?
From an investment perspective what criteria would you use to evaluate the options and decide?
Not sure how much charitable giving you do, but your might even consider moving it all to a Donor Advised Fund, forgoing the LTCG, and reaping a $35k deduction.
-
Commissions and capital gains taxes would eat up most of the benefit from trading those funds into an index. Maybe just plan to sell this holding first when you enter retirement.
Assume commissions would total $8, and assume 0% LTCG. In other words, non-factors.
Given those assumptions, the other part about holding to retirement is another way of asking my own question. Take the money and run, or hang in there?
Amazon certainly is not Buggy Whip, Inc. But it might be F.W. Woolworth on steroids (minus the lunch counter, of course).
-
What do you mean 'at BRK levels'? AMZN's market capitalization is already 48% higher than BRK. Do you mean trading for $300,000 per share? If so, are the sales of the companies you listed enough to increase Amazon's sales 200 times over? Once Amazon cannibalizes those companies, will it still command a Price to Sales ratio of 4 instead of a more typical 0.5 or 0.2?
I guess you should short Amazon asap. I'll hodl, thanks.
https://www.ben-evans.com/benedictevans/2014/9/4/why-amazon-has-no-profits-and-why-it-works
Thanks for the link. I read something similar before, but this graph stuck out this time:
(https://static1.squarespace.com/static/50363cf324ac8e905e7df861/t/5408ff81e4b00b9e179f54f6/1409875841787/?format=1000w)
It shows that Amazon's US retail share, already at 1.1% of all US retail, could grow 91x to 100% of US retail (I suppose). That could bring your $1,568.79 share price to $142,760, still short of BRK's $300k Is Amazon's share of worldwide retail close to 1% too? If it's more like 0.5%, then it could grow 200x by taking over all retail in the world in the next 15 years.
-
So on another forum when Amazon was being discussed, I referenced a retailer last century that was having impressive growth and built the world's tallest building to accommodate their future needs, only to have the growth fizzle out and the company fade.
The best comment was "Which company are you talking about? There are two that did that."
-
I have no idea. But, I'll offer an opinion that may not be worth the 0's and 1's it's written on :)
Will Amazon really be allowed to grow into their P/E rating? I recently read an interesting quote from Sam Zell on this:
"I can’t explain the valuation of the big tech companies, and can't believe that we won’t see a significant correction there. For example, in order to justify the multiple that Amazon trades at today, the company would have to be worth 25% of the US economy five years from now. This situation is no different from the one in 1997, when I pointed out that Cisco’s multiple would only be justifiable if the company represented 25% of the US economy five years later. "
My guess is anti-trust legislation would breakup Amazon well before this type of growth occurred.
I think Amazon is an amazing company. They'll continue to do amazing thing. With that said, their valuation is sky high right now.
Keep in mind that this isn't a decision between holding it all and selling it all. You can sell a portion, lock in the huge profit, while still holding some shares if you like.
-
Will Amazon really be allowed to grow into their P/E rating? I recently read an interesting quote from Sam Zell on this:
"I can’t explain the valuation of the big tech companies, and can't believe that we won’t see a significant correction there. For example, in order to justify the multiple that Amazon trades at today, the company would have to be worth 25% of the US economy five years from now. This situation is no different from the one in 1997, when I pointed out that Cisco’s multiple would only be justifiable if the company represented 25% of the US economy five years later. "
I think this is a good point. But it's not one that matters to me personally. I will likely be dead when the final story of Amazon is written.
For me, all I need to decide is if I personally think AMZN shares will do as well, or hopefully better, than an index fund going forward. If so, deviating from a strictly-Mustachian path will serve me. If not, I will suffer from not following the protocol.
So far my AMZN holding is out-performing index funds by about 4x. That could change tomorrow. But AMZN has outperformed the indexes most of (but certainly not all of) the last decade.
(https://i.imgur.com/JfpAAvZ.gif)
-
For fun, here's how Berkshire Hathaway compares with Amazon and the same index fund.
(https://i.imgur.com/EqwC6bC.gif)
-
I'd sell and put the money in index funds personally. What do you have your other assets in?
I'm not sure what's the best way to go about doing that tax-wise, though.
Why would you sell? How did you reach your conclusion?
My dilemma is one of take the money and run, or hang in there with Amazon. I really am interested in analysis and insight as to how to decide.
Just for sake of hypothetical discussion let's say $1 million portfolio, 85/15, everything except Amazon is index funds.
Would you buy it today at the current valuation?
More accurately, would you buy it at the current valuation minus what ltcg taxes would cost ?
-
Earnings probably don't tell all in this case. I used Schwab to compare companies by other metrics. I recommend you do something similar. I have no idea what metrics mean the most for the future. There are a few dozen provided by Schwab. Amazon looks best by trailing growth rate, but worst by various price/fundamental ratios. I am no expert, but when Amazon's trailing 1 year growth (30%) drops to equal Berkshire's (8.5%) shareholders will be very disappointed. The question is how much longer they can sustain growth before that happens.
Let's say fundamentals have room to triple to make sense relative to peers at the current price. If you expect Amazon's current business to expand by more than a factor of three in the future then hold on. If you expect it to expand by a factor of three or less then it will equal or under perform the market and you should sell while the selling is good, otherwise you are counting on further speculation before your selling point.
Price/Sales
AMZN 4.31
WMT 0.52
BRK/B 2.12
GOOG 7.21
TGT 0.53
AAPL 3.79
Price/Book
AMZN 53.35
WMT 4.35
BRK/B 2.20
GOOG 6.01
TGT 3.28
AAPL 6.86
Price/Cash Flow
AMZN 55.81
WMT 12.44
BRK/B 19.52
GOOG 27.20
TGT 7.70
AAPL 15.70
So, I vote sell.
-
For fun, here's how Berkshire Hathaway compares with Amazon and the same index fund.
I was just reading an entertaining thing about a similar situation.
https://web.archive.org/web/20021105191830/http://www.maxfunds.com:80/content/lc102901.html (halfway down)
M: "Cisco has grown earnings 30% a year for 10 years. What a reliable great growth stock. In 10 more years the earnings will be $20 billion a year, which will only give them a 25 P/E at the price I just paid. What a great deal. The error here is two fold, unrealistic estimations of future growth rates, and ridiculous valuations placed on the company as if this extreme long-term growth rate is without question going to happen without any hiccups. If your best case, rosy scenario growth estimate takes the company to a level were the P/E ratio is still high, you have no real chance of making any money as an investor in that stock long term."
K: “Well Marlowe, my fund may be more volatile than yours. But my investors are up 400% over the last three years, and your investors aren’t up that much in the last 10 years of your fund.”
-
Commissions and capital gains taxes would eat up most of the benefit from trading those funds into an index. Maybe just plan to sell this holding first when you enter retirement.
Assume commissions would total $8, and assume 0% LTCG. In other words, non-factors.
Given those assumptions, the other part about holding to retirement is another way of asking my own question. Take the money and run, or hang in there?
Amazon certainly is not Buggy Whip, Inc. But it might be F.W. Woolworth on steroids (minus the lunch counter, of course).
In that case, spend $16 and switch to VTI.
-
One I think is Sears... What is the other one?
Woolworth's.
-
If you are in it for the return and not because you believe in Amazon as a stock, it sounds like you've already made a great return on it. So you've been successful and are now just trying to squeeze out a bit more? But what if it tanks? Take the win and call it a day, especially if you believe the best strategy as most do on here is index funds.
-
As long as Bezos is the CEO, government doesn’t break up Amazon (like they did Microsoft), and we don’t have a recession which brings down everyone, AMZN is a buy IMO. Bezos wants to take over the world and he’s smart enough to do it.
-
As long as Bezos is the CEO, government doesn’t break up Amazon (like they did Microsoft), and we don’t have a recession which brings down everyone, AMZN is a buy IMO. Bezos wants to take over the world and he’s smart enough to do it.
I agree with all of this. That being said, to actually out earn the expectations (which they have done in the past) would require them getting possibly too large. I do feel they might be split up by the government. Also, Bezos has been unstoppable, but at some point he could decide he has enough money or no longer be in charge for whatever reason.
Those were my reasons for finally selling my 9 shares a few weeks ago and turning the 110%+ profit into index funds.
-
Amazon could easily be broken into three parts: cloud service, fulfillment by amazon, fulfillment by third party vendors and perhaps even more parts. I'm not that familiar with their business model.
-
Amazon could easily be broken into three parts: cloud service, fulfillment by amazon, fulfillment by third party vendors and perhaps even more parts. I'm not that familiar with their business model.
AWS (cloud) is big enough that I wouldn't be surprised if it eventually faced anti-trust action based only on that.
-
Amazon could easily be broken into three parts: cloud service, fulfillment by amazon, fulfillment by third party vendors and perhaps even more parts. I'm not that familiar with their business model.
AWS (cloud) is big enough that I wouldn't be surprised if it eventually faced anti-trust action based only on that.
Not a whole lot of antitrust actions these days.
If one happens, it won't be because AMZN got too big; it'll be because Trump wants to wreck Bezos. (Probably a not-insignificant threat to Amazon, actually.)
-
If it’s broken up or Bezos steps down then you can justify selling. Until then, you have one of the smartest and most driven men in history doing all the hard work of growing a business for you.
There is a reason smart people are willing to pay a high price for AMZN. If Steve Jobs was still alive Apple would be the same - buy buy buy. When in doubt, buy the smartest, most aspirational leader you can find.
FB, NFLX, GOOGL and in a ways TSLA fall under the same criteria. Value investors go ahead and stay away, these are the nifty fifty stocks to own until this bull market is over.
-
Is it the 1980s again?
AMZN is basically organized as a conglomerate like GE. Jeff Bezos is lionized like Jack Welch used to be. There is talk of this conglomerate business model taking over the world like there used to be. The company is growing by paying aggressively for acquisitions. What could go wrong?
-
AMZN is basically organized as a conglomerate like GE.
...
The company is growing by paying aggressively for acquisitions. What could go wrong?
This is exactly the opposite of what Amazon is doing to grow. It is building internal systems at immense scale and then productizing them and selling the additional capacity to others.
AMS began because Amazon had to build enough computer capacity to run flawlessly at peak load. On Black Friday, their site has to run as well if not BETTER than it does on normal days. That is an INSANE amount of computer horsepower that is by comparison largely idle 90% of the year. Hence AMS -- an experiment in selling off surplus that turned out to be a profit monster.
FBA is the same thing. It was the third attempt to grow Amazon, after two earlier failures. One was Amazon Auctions, which failed fast. Another I think was called Amazon Stores...didn't really work. FBA worked better than they could have imagined.
Bezos is super smart, but he's willing to experiment. Fire Phone -- nutty idea that was a disaster. Alexa -- nutty idea that for some reason worked. They throw stuff against the wall, some things work.
The healthcare partnership with Buffett & JP Morgan is the same thing. It will be an internal system for all three companies. They will try to debug it, see if they can make it work better than the way things are done now. It very may well fail. But if it works, it may change healthcare in the U.S.
They may buy certain strategic companies -- like the Ring video doorbell -- but that's not a core pillar of the company like AMS; it's a quick technology leapfrog where they're already all-in (accessing people's homes for secure/trusted deliveries.)
-
Would you buy it today at the current valuation?
No I would not. But then again I no longer buy individual stocks. Amazon is a last vestige of the days when I thought I was clever.
Ideally you have a reason for your initial Amazon investment that is or no longer is true.
Now you're just making me feel foolish. I did not have a good reason, at least none that I can remember. As far as I can remember it was a feeling, i.e., a wild ass guess. Maybe that weighs in favor of cashing out.
From my ability to research, it seems almost all analysts are bullish on Amazon with a target price of $1,670, compared with today's close of $1,582 (down about $9 today). Even at that bullish analyst price, though, I am only looking at another couple thousand bucks of gains if it gets that high.
Sounds like you need a personal investment statement. it would answer this question for you. If you no longer buy individual stocks, then to me it stands to reason that you should sell individual stocks. The numbers hardly even matter. You've decided (and the stats support the decision) that mutual funds make more sense than individual stocks. Correct? So, look at that statement. If mutual funds make more sense than individual stocks, then why on earth wouldn't you trade an individual stock for a mutual fund?
Stock prices and possible acquisitions and earnings and forced splits or anything else shouldn't even factor into this. That's just overly complicating things. Right now, it's like you bought a lottery ticket. You've since decided that lottery tickets are foolish, but you still want to know if you should roll your $100 in lottery win into more lottery tickets. No.
Again, I'd recommend coming up with a personal investing statement, and then following it, and it sounds like it will lead you to the obvious conclusion that you need to sell.
-
Sounds like you need a personal investment statement.
Thank you for this.
Any examples or models for such a statement? I have never written one for myself.
-
Is it the 1980s again?
AMZN is basically organized as a conglomerate like GE. Jeff Bezos is lionized like Jack Welch used to be. There is talk of this conglomerate business model taking over the world like there used to be. The company is growing by paying aggressively for acquisitions. What could go wrong?
Welch couldn’t tie Bezos’s shoes. Bezos is so much more than Welch will ever be.
-
Sounds like you need a personal investment statement.
Thank you for this.
Any examples or models for such a statement? I have never written one for myself.
Start here: https://www.bogleheads.org/wiki/Investment_policy_statement
-
Sounds like you need a personal investment statement.
Thank you for this.
Any examples or models for such a statement? I have never written one for myself.
Some info and links here that might get you started.
https://www.bogleheads.org/wiki/Investment_policy_statement
I should also add that I call mine a personal investing statement, but most people seem to call it an investing policy statement (IPS), so that might help with google search.
-
I comes down to this; do you want to put all your eggs in one basket? Amazon is a very nice basket, but it's still one basket. There are a lot of ways that Amazon could do really well, but there are also a lot of ways it could fall as quickly as it rose. Both sides of the coin should already be priced in anyway.
-
Sounds like you need a personal investment statement.
Thank you for this.
Any examples or models for such a statement? I have never written one for myself.
Here are some examples from the Bogleheads wiki:
https://www.bogleheads.org/wiki/Investment_policy_statement
I am still refining my own after a recent portfolio overhaul. I should probably finish that and post it for feedback.
ETA: whoops, forgot to read the second page. At least 3 replies all pointed to the same place :P
-
My dilemma is one of take the money and run, or hang in there with Amazon. I really am interested in analysis and insight as to how to decide.
Just for sake of hypothetical discussion let's say $1 million portfolio, 85/15, everything except Amazon is index funds.
I just want to throw out the fact that there is a pretty interesting third option, donate them to your very own charitable giving fund. (https://forum.mrmoneymustache.com/taxes/let%27s-talk-about-dafs/)
Since we're speaking in hypotheticals here, hypothetically since you're on this forum and we're throwing around a $1MM portfolio you might have aspirations of Retiring Early in the not too distant future. Assuming that's true, and that you're still working and in a fairly high tax bracket, and that you expect you'd give $35k to charity over the course of your remaining life (including church or similar, if you like), then donating them is the perfect thing to do with such highly-appreciated shares.
1) Since you're donating it to a non-profit (your fund) you don't have to pay a penny of Capital Gains tax.
2) This year you'd be able to deduct the fully appreciated $35k current value if you itemize your deductions (yes, a double-whammy tax benefit).
3) By taking the tax benefit now while you're working you can get much more value out of it than if you were to just donate to charities when you aren't (and presumably in a lower bracket).
4) You don't have to give it all away to charities this year, it can sit in your fund and even remain invested and grow until you decide who and when to give money to. The only caveat is that the money has to go to 501c3 non-profits and you can't ever get it back if you change your mind, since you've already given it away to a charity (your fund) and taken the tax benefits.
Edit: Never mind, it looks like this was already raised and answered. I should read more carefully.
-
First, I should start by saying that most of my purchases these days are index funds; however, I keep a very short list of companies to pick up if they go on sale.
AMZN is one that I'm still kicking myself for not picking up and I'd be surprised if the stock either doesn't split or start paying a dividend in the next one to five years so there is that as well. Maybe just put a stop loss on it and leave it at that?
Not paying dividends is sort of their fundamental business model.
-
First, I should start by saying that most of my purchases these days are index funds; however, I keep a very short list of companies to pick up if they go on sale.
AMZN is one that I'm still kicking myself for not picking up and I'd be surprised if the stock either doesn't split or start paying a dividend in the next one to five years so there is that as well. Maybe just put a stop loss on it and leave it at that?
Not paying dividends is sort of their fundamental business model.
Can't be sustained indefinitely though. At some point shareholders are going to demand some sort of ROI other than just the stock going up.
Even if they're mathematically equivalent? If a company is doing well reinvesting capital into increased productivity, don't rock the fucking boat. Rent-seeking behavior, etc., etc.
-
Yeah Buffett shareholders have been screaming for decades for him to pay a dividend...
/s
-
First, I should start by saying that most of my purchases these days are index funds; however, I keep a very short list of companies to pick up if they go on sale.
AMZN is one that I'm still kicking myself for not picking up and I'd be surprised if the stock either doesn't split or start paying a dividend in the next one to five years so there is that as well. Maybe just put a stop loss on it and leave it at that?
Not paying dividends is sort of their fundamental business model.
Can't be sustained indefinitely though. At some point shareholders are going to demand some sort of ROI other than just the stock going up.
I've never heard that going on at the BRK.A shareholder meetings I've attended. Most folks are happy with the stock just going up.
Cheers,
Salmo
-
Wouldn't you know it, as soon as I start considering a move the MFer drops like a stone. Down 11% since my original post as of this writing.
Sometimes I think it's just straight up bad luck to keep an eye on this shit.
-
Sometimes I think it's just straight up bad luck to keep an eye on this shit.
It's not bad luck; it's just not something you should do with your psychology.
If you had a fear of heights you wouldn't constantly go to skyscraper roofs and look down.
-
Apparently Trump is ranting against Amazon today.
The good news is, Trump is so erratic, he may point his jihad in another direction at any minute.
-
Sometimes I think it's just straight up bad luck to keep an eye on this shit.
It's not bad luck; it's just not something you should do with your psychology.
If you had a fear of heights you wouldn't constantly go to skyscraper roofs and look down.
I hate to be that guy, but that's actually called exposure therapy.
-
Well. There you go. Share price up over $1,600 in after hours trading. I stop thinking about it for a couple of weeks and look what happens.
https://www.thestreet.com/investing/stocks/amazon-shares-hit-all-time-high-on-quarterly-beat-14570568
I expect some profit taking tomorrow on the NASDAQ. But I'll take this. Better than a poke in the eye with a sharp stick.