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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

#71

Post by MichaelApproved »

Retric wrote: post #18
simonsarris wrote: post #10

Earlier quoted context omitted.

Sorry, I'm only referring to new money: every 2 weeks I put $1000 into my brokerage account to buy whatever long term stocks/funds on my watchlist look good that week. Lately that's been nothing but Target, but it might switch to nothing but Amazon next month, or 50% AMZN 50% something else, and so on. So it's just the new money coming into the account getting divvied up, but doesn't reflect the actual holdings of lo…

You might want to consider buying 2000$ every 4 weeks depending on your transaction fees.

$2,000 is better but even that's rough. Consider you have $7 commission. With each $1,000 purchase, you have to earn 0.70% just to earn back that $7. If you sell that $1,000 purchase, it'll cost another 0.70%, totaling 1.4% in fees.

Based on your strategy you're probably incrementally purchasing and the selling in bulk so the sell commission isn't as damaging but losing 0.70% of an investment right off the bat makes it hard to be profitable. Even half that amount, if you increase your lots to $2,000, is painful.

Re: Amazon Reports First Quarterly Loss in 4 Years

#72

Post by pyoung »

lesterbuck wrote: post #59
pyoung wrote: post #40

Earlier quoted context omitted.

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…

Totally agree. Once again, I may read too much sci-fi, but I think the end game (as it should be) to technological progress is the elimination of labor, completely. This probably won't happen in my lifetime, but assuming civilization can survive long enough, I believe it is inevitable. I can't even imagine what a society would look like under these conditions..., a post-scarcity economy would be a good starting point, I suppose.

I will definitely put that book on my 'to read' list. Very rarely have I been disappointed by an HN recommendation.

Re: Amazon Reports First Quarterly Loss in 4 Years

#73

Post by jamesaguilar »

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…

Man with that 20/20 hindsight you'd be a perfect historian. Can't say it does you much credit as a stock analyst though.

Re: Amazon Reports First Quarterly Loss in 4 Years

#74

Post by jamesaguilar »

confluence wrote: post #60
nandemo wrote: post #57

Earlier quoted context omitted.

> 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.

There are degrees of protection. No protection is perfect, but you're a lot less likely to be totally wiped out with a diversified portfolio. 100% of my wealth is in company A, and it goes bankrupt, I have nothing. If I have it in two companies, unless they are perfectly interdependent, I lower my likelihood of being completely wiped out from 100% to This is basic personal finance. TBH, I'm really surprised your comments aren't all at the lightest shade of gray already.

Re: Amazon Reports First Quarterly Loss in 4 Years

#75

Post by ronaldj »

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…

Oh man! I lost a bunch on OCZ too. :\

Re: Amazon Reports First Quarterly Loss in 4 Years

#76

Post by pyoung »

busyant wrote: post #42
pyoung wrote: post #40

Earlier quoted context omitted.

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…

> we will need to do a better job at educating them to prepare them for more high skilled labor. What about people who can't be educated for high-skilled labor? Seems like a taboo subject, but there are a lot of people like this in the world. What do they do? * edit. These labor shake-ups are going to take place in "high-skilled" areas, too. IBM's Watson can probably be trained to be more talented at illness diagnosi…

Regarding your first point, I don't have an answer. But, for a more ironic take on the issue, please read 'Player Piano' by Vonnegut.

Regarding your second point, I addressed this in the other post, but post-scarcity economics seems to be the best 'thought experiment' as to what a future society would look like. I truly believe that we are entering an age where human labor will become obsolete. It may take a while but, its going to happen.

Re: Amazon Reports First Quarterly Loss in 4 Years

#77

Post by confluence »

jamesaguilar wrote: post #73
confluence wrote: post #54

Earlier quoted context omitted.

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…

Man with that 20/20 hindsight you'd be a perfect historian. Can't say it does you much credit as a stock analyst though.

Well here's my forward looking projection - Groupon, Zynga and Pandora will go bankrupt within the next 3 years.

It really isn't that bloody hard to see shit for what it was - if you aren't making any money, if you are buying revenue, and if your service is commodity then you will be both a bad investment and eventually go bankrupt. Enron, WorldCom, MCI, Zynga, Groupon, Pandora fit these cases and hence will fail.

It irritates me saying "Ohh who could've predicted the GFC, or Enron or WorldCom or the DotCom bubble or whatever". Just because you don't see the asteroid coming before it crashes - it does not follow that it was a black swan. Grab a telescope and you'd have seen it coming 30 years out.

If you aren't making money and your business model is neither defensible nor proprietary - you will go out of business.

Re: Amazon Reports First Quarterly Loss in 4 Years

#78

Post by confluence »

jamesaguilar wrote: post #74
confluence wrote: post #60

Earlier quoted context omitted.

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.

There are degrees of protection. No protection is perfect, but you're a lot less likely to be totally wiped out with a diversified portfolio. 100% of my wealth is in company A, and it goes bankrupt, I have nothing. If I have it in two companies, unless they are perfectly interdependent, I lower my likelihood of being completely wiped out from 100% to This is basic personal finance. TBH, I'm really surprised your comm…

> basic personal finance

I fully understand the arguments for diversification. Just like I fully understand CAPM, modern portfolio theory and the assumption that var=risk.

But it's all bullshit. Why are you investing in companies that have that risk? If you understand which companies return higher returns - why aren't you all in on them?

It's bloody hard to find good companies and when you do - why on earth would you diversify into their worse off counterparts? You need to have heavy concentration in great companies where you are perfectly fine having a 10 year hold on at the right price.

Re: Amazon Reports First Quarterly Loss in 4 Years

#79

Post by Someone »

confluence wrote: post #55
mylittlepony wrote: post #45

Earlier quoted context omitted.

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).

Not "Only if the assets are uncorrelated and independent", but "As soon as the assets are not 100% correlated".

That is a huge difference. The dot com bust affected (almost) all tech stocks, but they didn't all go bankrupt.

Re: Amazon Reports First Quarterly Loss in 4 Years

#80

Post by polyfractal »

confluence wrote: post #78
jamesaguilar wrote: post #74

Earlier quoted context omitted.

There are degrees of protection. No protection is perfect, but you're a lot less likely to be totally wiped out with a diversified portfolio. 100% of my wealth is in company A, and it goes bankrupt, I have nothing. If I have it in two companies, unless they are perfectly interdependent, I lower my likelihood of being completely wiped out from 100% to This is basic personal finance. TBH, I'm really surprised your comm…

> basic personal finance I fully understand the arguments for diversification. Just like I fully understand CAPM, modern portfolio theory and the assumption that var=risk. But it's all bullshit. Why are you investing in companies that have that risk? If you understand which companies return higher returns - why aren't you all in on them? It's bloody hard to find good companies and when you do - why on earth would you…

> basic investing

Either I'm misunderstanding your argument or you are missing a fundamental tenant of finance (and indeed, most things in life). Higher returns typically comes with higher risk. A brand new startup is high risk with high reward if it pays out. The same thing applies to financial investments in high risk companies.

People take risks because they want to try and beat the historical growth in their portfolio. By taking on that risk, they know that they may lose money instead of grow their money.

Diversifying allows them to adjust how much risk they want to take above the standard market growth.

"Great Companies" is such a bad guide star for investing. Sears looked like a "great company" 10 years ago. Kodak? Any big box retailer?

Anyway, there are perfectly sound investing theories that say investing in the worst companies can result in higher returns than any "great company" investment portfolio. Value investing at it's most extreme. You just need a few of the losers to become mediocre to make huge gains, while trying to get great companies to grow past their high stock price is extremely hard.

I agree with your long-term strategy...but I don't see any reason to hold long-term stakes in individual companies. Why not just hold long term on index funds?

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