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Amazon Reports First Quarterly Loss in 4 Years

nytimes.com

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Re: Amazon Reports First Quarterly Loss in 4 Years

#51

Post by polyfractal »

confluence wrote: post #19
thetabyte wrote: post #6

Earlier quoted context omitted.

Dumb question, as I literally know nothing about stock or savings: isn't it generally a bad idea to put 100% of your long term money in any one place?

Isn't it stupid to just to have one job, one car, be a citizen of one country, have one house and one family. I mean really - one must diversify. What would you do if you lost any one of those? No, it's not stupid to concentrate wealth. Problems only arise when you do it stupidly, like buying too big a house, being part of the wrong family, living in the wrong country or buying an unsafe car. Diversification does not…

Diversification reduces risk, it does not eliminate it.

Concentrating wealth in stock is a particularly dumb idea, because even public companies are relatively opaque. Enron looked like a pretty good deal to an outsider, right?

Using things like citizenship, cars, households and families is a straw man and not related to financial investment at all.

Re: Amazon Reports First Quarterly Loss in 4 Years

#52

Post by jser »

Androsynth wrote: post #30

About two months ago I was thinking that the bubble, of which everyones been talking about for the past years, might finally pop soon. I thought I might short some major tech companies and make some money off of it. I had two indicators that I was looking at to determine the start of it: 1-Zynga begins laying off people. (really, any big web 2.0 company begins laying off people, but zynga seemed like the logical choi…

Amazon does not breakout revenue for AWS -- it's grouped into the "Other" category. Analysts estimate it could be nearing a $1B business, but Amazon has a yearly revenue exceeding $48B. I don't think the stock market places much value on AWS today, so a slowdown should not greatly impact the stock (if the market did, we would have seen the stock decline during AWS outages).

Re: Amazon Reports First Quarterly Loss in 4 Years

#53

Post by theatraine »

simonsarris wrote: post #3

Shares already recovering, loss was "better" than expectations, a lot of their spending is on important business stuff (warehouses, kindle, web properties) that will yield returns later. In other words, revenue is nearly identical and there's no profit, presumably because of these new things. Amazon is one of the few very large companies that has extremely high potential for growth. I made an OK amount of money buyin…

They're also building up their human capital. They've recently been hiring quite a lot of engineers, which will certainly yield later returns. I'm basing this on my own experience with them, as I got a job offer, spoke with several recruiters, and toured their campus, and now live in Seattle.

Re: Amazon Reports First Quarterly Loss in 4 Years

#54

Post by confluence »

polyfractal wrote: post #51
confluence wrote: post #19

Earlier quoted context omitted.

Isn't it stupid to just to have one job, one car, be a citizen of one country, have one house and one family. I mean really - one must diversify. What would you do if you lost any one of those? No, it's not stupid to concentrate wealth. Problems only arise when you do it stupidly, like buying too big a house, being part of the wrong family, living in the wrong country or buying an unsafe car. Diversification does not…

Diversification reduces risk, it does not eliminate it. Concentrating wealth in stock is a particularly dumb idea, because even public companies are relatively opaque. Enron looked like a pretty good deal to an outsider, right? Using things like citizenship, cars, households and families is a straw man and not related to financial investment at all.

Enron didn't look like a good idea. They ran a commodity business at insane valuations with huge revenue run up during a bubble.

Stating that Enron was a good idea was like stating Groupon was a good idea. Commodity companies that buy revenue (includes WorldCom and MCI) are always bad investments. Once again - had you invested in them you would be a moron.

It'd be fair to state that diversification protects against stupidity.

However, it does not reduce risk in the way people assume.

Re: Amazon Reports First Quarterly Loss in 4 Years

#55

Post by confluence »

mylittlepony wrote: post #45
confluence wrote: post #19

Earlier quoted context omitted.

Isn't it stupid to just to have one job, one car, be a citizen of one country, have one house and one family. I mean really - one must diversify. What would you do if you lost any one of those? No, it's not stupid to concentrate wealth. Problems only arise when you do it stupidly, like buying too big a house, being part of the wrong family, living in the wrong country or buying an unsafe car. Diversification does not…

Diversification does reduce the risk of losing it all, as it changes the probability distribution ( https://en.wikipedia.org/wiki/Probability_distribution ). It also reduces the probability of winning a lot, but people like stability.

Only if the assets are uncorrelated and independent.

Otherwise diversification often gives a false sense of security with higher systemic risk (see GFC).

Re: Amazon Reports First Quarterly Loss in 4 Years

#56

Post by confluence »

mikeash wrote: post #43
confluence wrote: post #19

Earlier quoted context omitted.

Isn't it stupid to just to have one job, one car, be a citizen of one country, have one house and one family. I mean really - one must diversify. What would you do if you lost any one of those? No, it's not stupid to concentrate wealth. Problems only arise when you do it stupidly, like buying too big a house, being part of the wrong family, living in the wrong country or buying an unsafe car. Diversification does not…

I assume you don't bother to back up your data either.

Diversification only works if your assets are independent. Buying multiple stocks is the same as buying a call on the world - it only reduces localised risk.

But then again - why are you investing in companies that you believe have localised risk of bankruptcy and a low chance of attaining future profits.

Re: Amazon Reports First Quarterly Loss in 4 Years

#57

Post by nandemo »

confluence wrote: post #19
thetabyte wrote: post #6

Earlier quoted context omitted.

Dumb question, as I literally know nothing about stock or savings: isn't it generally a bad idea to put 100% of your long term money in any one place?

Isn't it stupid to just to have one job, one car, be a citizen of one country, have one house and one family. I mean really - one must diversify. What would you do if you lost any one of those? No, it's not stupid to concentrate wealth. Problems only arise when you do it stupidly, like buying too big a house, being part of the wrong family, living in the wrong country or buying an unsafe car. Diversification does not…

> Isn't it stupid to just to have one job, one car,

Indeed people who own a job, a car or a house are well advised to have insurance. And insurance is a form of diversification.

For countries the analogy is flimsy, but if you live in a country that has had any of: wars, dictators, property confiscation or high rate of violent crime in the recent past (which describes most of the non-developed world, including emerging countries), it's a good idea to have a passport and a way to move elsewhere.

Re: Amazon Reports First Quarterly Loss in 4 Years

#58

Post by jlgreco »

confluence wrote: post #54
polyfractal wrote: post #51

Earlier quoted context omitted.

Diversification reduces risk, it does not eliminate it. Concentrating wealth in stock is a particularly dumb idea, because even public companies are relatively opaque. Enron looked like a pretty good deal to an outsider, right? Using things like citizenship, cars, households and families is a straw man and not related to financial investment at all.

Enron didn't look like a good idea. They ran a commodity business at insane valuations with huge revenue run up during a bubble. Stating that Enron was a good idea was like stating Groupon was a good idea. Commodity companies that buy revenue (includes WorldCom and MCI) are always bad investments. Once again - had you invested in them you would be a moron. It'd be fair to state that diversification protects against s…

Put it this way, from the outside they looked a lot better than they really were. Looking as bad as Groupon and actually going as sour as Enron did are two wildly different things.

Re: Amazon Reports First Quarterly Loss in 4 Years

#59

Post by lesterbuck »

pyoung wrote: post #40
WalterBright wrote: post #34

Earlier quoted context omitted.

I don't believe that. Throughout history, labor-saving machinery has put people out of work, and they become available labor for entirely new industries. For example, there's a growing industry now of digitizing the zillions of documents, books, photos, movies, art, etc. This is low skilled labor. Or Apple/Google/Microsoft sticking camera hats on people and having them hike trails to develop maps. The list is endless…

Both of those examples seem like temporary solutions at best. And robotic tech already exists that could theoretically replace humans for those tasks. I may read too much sci-fi, but I am fully convinced that we are heading to a future where most menial, low skill tasks will soon be done by technology and robotics. We have been heading in that direction for quite some time and I don't see that changing. The end resul…

Alas, technology is destroying higher skilled, white collar jobs at a furious pace. At least that is the main thesis of the recent book by MIT business school faculty:

Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy http://www.amazon.com/Race-Against-Machine-Accelerating-Prod...

They give three explanations for the current slow job growth: (1) business cycle lack of demand, needing normal Keynsian stimulus, (2) technology running out of steam in improving productivity, and (3) the opposite, technology accelerating and destroying the need for highly profitable businesses to hire more workers. The authors think technology acceleration has been underappreciated for its effects on suppressing job growth.

Re: Amazon Reports First Quarterly Loss in 4 Years

#60

Post by confluence »

nandemo wrote: post #57
confluence wrote: post #19

Earlier quoted context omitted.

Isn't it stupid to just to have one job, one car, be a citizen of one country, have one house and one family. I mean really - one must diversify. What would you do if you lost any one of those? No, it's not stupid to concentrate wealth. Problems only arise when you do it stupidly, like buying too big a house, being part of the wrong family, living in the wrong country or buying an unsafe car. Diversification does not…

> Isn't it stupid to just to have one job, one car, Indeed people who own a job, a car or a house are well advised to have insurance. And insurance is a form of diversification. For countries the analogy is flimsy, but if you live in a country that has had any of: wars, dictators, property confiscation or high rate of violent crime in the recent past (which describes most of the non-developed world, including emergin…

Then buy insurance - put out a costless collar if you are that worried.

If you want to diversify you need to actually buy reverse correlated assets. So go ahead - hedge with options, hedge with futures, hedge with shorting the indices.

But don't think buying disparate companies protects you - it doesn't.

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