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post #121 of 122
Quote:
Originally Posted by 1brayden View Post
 

 

This is such a lopsided and naive view of why Amazon is not making money. So far gone there is no point in trying to reel you back in. Cut bait as they say in fishing. lol

 

Your view of Apple also is in the same category... limited and naive. 

 

I don't defend Amazon and am neither really for nor against them.  Just explaining that there *is* a rationale there whether anybody (including myself) chooses to agree with it or not.

 

I'm fairly certain the shoe on the average AI'rs foot would be different if Apple saw a huge opportunity in the future that they believed could net them a $2,000,000,000,000 and they chose to invest their entire saving of @$150,000,000,000 in it.  On that year, assuming Apple 'made' 50 bil from products- they would post a staggering loss (probably the biggest in history) of $100,000,000,000    If data showed they were well poised and hitting landmarks to capture that $2,000,000,000,000 a year market, their shares would go up and their PE would be astronomical.  If they actually succeed in capturing the market it was Apple's boldest and biggest success to choose to lose 100 billion dollars in a year.  Anyone who invested in them would be staggeringly rich.  If they fail, there's a lot of people left with nothing.  Amazons staggering revenue growth year over year has shown it is on a steady path, it has without question sacrificed taking profits along the way.

 

I am not invested in Amazon because I think it is too risky, and largely because I simply don't want them to succeed even though they show continued growth.  If Amazon does succeed and their revenue trends continue, when they do stop expanding they are going to pretty much be the only company standing.  Blech.   I invested quite heavily in Apple prior to the '6 buildup' and am enjoying some success with that.   I admit it has nothing to do with fundamentals, other than I am fundamentally counting on people to be irrational.  Apple does have great fundamentals, and even better products, but neither are going to add up to the ludicrous valuation and pop I believe Apple shares are just starting to enjoy.  It is the 5 all over again.  Stock will go nuts, people are going to absolutely love the 6 and it will have record sales.  Stock will adjust downward out of the stratosphere when Wall Street does the math.   Hopefully I am wrong and I would be happy to be wrong.  I'll have made a very nice ROI, and all other Apple shareholders will be driving Ferrari's within a few months.  Win/win.

 

I would love it if you could educate me and improve my naive views.  Maybe tell me what a company can do with its income other than taking profits, reinvesting, or returning to investors (yes, where 'litigation' would certainly be a form of reinvesting).

 

Where a company chooses to draw its line between profits and reinvesting is a key question.  Slumlords want to take 100% profits without reinvesting in their product, Amazon wants to reinvest 100% whether it makes or loses money.   I think Apple has a very good balance, maybe a little on the cautious side (they were way too skewed previously, but dividends and buybacks were absolutely a balancer).

post #122 of 122
Quote:
Originally Posted by Frood View Post
 

 

I don't defend Amazon and am neither really for nor against them.  Just explaining that there *is* a rationale there whether anybody (including myself) chooses to agree with it or not.

 

Of course there is a plan out there and certainly, there is no shortage in the number of interpretations (like yours). The question is whether the plan works or not. It is not working and people are starting to clue in. 

 

The top line means nothing when there is nothing left on the bottom line.

 

Quote:
Originally Posted by Frood View Post
 

I'm fairly certain the shoe on the average AI'rs foot would be different if Apple saw a huge opportunity in the future that they believed could net them a $2,000,000,000,000 and they chose to invest their entire saving of @$150,000,000,000 in it.  On that year, assuming Apple 'made' 50 bil from products- they would post a staggering loss (probably the biggest in history) of $100,000,000,000    If data showed they were well poised and hitting landmarks to capture that $2,000,000,000,000 a year market, their shares would go up and their PE would be astronomical.  If they actually succeed in capturing the market it was Apple's boldest and biggest success to choose to lose 100 billion dollars in a year.  Anyone who invested in them would be staggeringly rich.  If they fail, there's a lot of people left with nothing.  Amazons staggering revenue growth year over year has shown it is on a steady path, it has without question sacrificed taking profits along the way.

 

This illustration (outlandish IMO) mixes timelines. Apple is established, when Amazon started it had nothing. So for the past 18+ years it has been stringing everyone out. It's always on the come with no definition of when it will be ready. If you've ever managed a sales department, the low performers will keep telling you the business is just about to cut loose for as long as you let them.

 

Quote:
I would love it if you could educate me and improve my naive views.  Maybe tell me what a company can do with its income other than taking profits, reinvesting, or returning to investors 

 

That is a pat statement, sort of like born, live, die. Can't argue with basics. However, it needs to be applied to the appropriate situation. No Main Street business could operate the way Amazon has. All Amazon has succeeded in doing is create a false economy and diverted what should have been profits to local businesses to shareholders and insiders in the form of overvalued shares... think Enron.

 

The naivety comment refers to your statement "If Amazon stopped reinvesting the 4 bil a year they do, that money would go right to their bottom line.  So they could bank a profit of 4,000,000,000 minus the 300 mil... or show a profit of 3.7 billion."

 

Really? Cashflow that is required to service expenses,overheads and debt would magically turn into profit just like turning off a tap?

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