Q: Does Amazon (AMZN) qualify for the Fixed System Short List No. 2?
A: Yes, it qualifies but it isn’t on just yet. I’m currently reviewing a lot of options and waiting for the completion of a countertrend bear market rally.
Q: Do you see any accounting issues with Amazon?
A: No more than all the rest: earnings per share with or without extraordinary expenses, capitalization versus write off, etc. I think the company would be a value investment at $10 per share.
At $500 per share it may be a short. I do not expect the company to go out of business. It’s not like Tesla Motors (TSLA) that has no viable business model.
Q: Selling books on the Internet was once a hot new idea, but that’s yesterday’s news. Why the sky-high share price now? I don’t see the logic.
A: As Ayn Rand said on more than one occasion, if you don’t think it is logical, think again. The clue that tells the whole story for me is Amazon’s CEO and biggest shareholder, Jeffrey Bezos’, purchase of the Washington Post newspaper. He paid a lot of money for a contracting business unrelated to his core business.
Q: Why did he do that?
A: I don’t have any inside information, but it’s clear that the sellers got more than they would have in a normal arm’s length sale. It looks like Bezos paid his initiation fee to join the establishment: DC and Wall Street.
Q: How does that relate to a sky-high share price?
A: In real estate the three most important things are location, location, and location. In stock promotion they’re distribution, distribution, and distribution. Bezos has bought distribution. That’s why the shares are selling for 100 times the company’s breakup value.
Q: Are you suggesting that Amazon’s a scam?
A: No, only that it’s overpriced on a fundamental valuation basis. I think Mr. Jeffrey Bezos should be inducted into the CEO stock promoters hall of fame. He’s done a masterful job for his shareholders.
Q: Is this promotion too dangerous to short?
A: All promotions, even government sponsored promotions, come to an end. Here we’re dealing with the establishment. Our short selling should dovetail with their plans. We should not fight them directly.
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And yes, it is possible to turn 10K into 5.5m in less than a year trading futures and options.
Furthermore, Carthage must be destroyed!
Photo credit: Santhosh Kumar . N via VisualHunt / CC BY-NC-SA
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