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nitro
Registered: Sep 2001
Posts: 12518 |
10-23-09 06:10 PM
Please explain something to me. Today as an example, AMZN is up 25% because earnings obliterated analyst estimates.
What I don't understand is, who cares from an investor point of view? Break it down for me: how does the fact that AMZN made all that money, relate into money in my own pocket as an investor? People will say, well, the company has more money, so it can acquire other companies which will lead to even more revenues, and it can buy more books, update it's computers, hire more programmers, etc etc etc. But how does any of that translate into money in my pocket if I am an investor in AMZN? Unless I share in that profit, why would I ever care? Is the value of the higher earnings only that I know you care because you are an idiot, so I will be an idiot with you and anticipate that you are going to buy the stock, and I buy the stock too, hoping to sell it to an even bigger idiot later? Is it all an illusion?
To me, the only thing that matters as an investor is the dividend because ultimately, unless I work for AMZN, it is the only tangible way I can profit from AMZN doing well. And yet, investors bid up the stock of AMZN as if it was money they were making  People say, dividends are double taxed, blah blah blah. That's why companies don't pay more dividends. Well, yeah, but it is real!
I must be missing something.
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TraderZones
Registered: Mar 2008
Posts: 5093 |
10-23-09 06:16 PM
Quote from nitro:
Please explain something to me. Today as an example, AMZN is up 25% because earnings obliterated analyst estimates.
What I don't understand is, who cares from an investor point of view? Break it down for me: how does the fact that AMZN made all that money, relate into money in my own pocket as an investor? People will say, well, the company has more money, so it can acquire other companies which will lead to even more revenues, and it can buy more books, update it's computers, hire more programmers, etc etc etc. But how does any of that translate into money in my pocket if I am an investor in AMZN? Unless I share in that profit, why would I ever care? Is the value of the higher earnings only that I know you care because you are an idiot, so I will be an idiot with you and anticipate that you are going to buy the stock, and I buy the stock too, hoping to sell it to an even bigger idiot later? Is it all an illusion?
To me, the only thing that matters as an investor is the dividend because ultimately, unless I work for AMZN, it is the only tangible way I can profit from AMZN doing well. And yet, investors bid up the stock of AMZN as if it was money they were making
I must be missing something.
Two words:
Growth
Expectations
Traders keep forgetting that expectations is what moves a stock. When something like this comes in that impacts growth prospects up or down, the expectations change almost instantaneously.
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nitro
Registered: Sep 2001
Posts: 12518 |
10-23-09 06:19 PM
Quote from TraderZones:
Two words:
Growth
Expectations
Traders keep forgetting that expectations is what moves a stock. When something like this comes in that impacts growth prospects up or down, the expectations change almost instantaneously.
I must not be making myself clear. Why do you as an investor care that AMZN has every single dollar in the Universe in earnings, and everyone on the planet owns AMZN, and the stock price is at 1,000,000? How does that translate into you making money unless the company pays out a dividend?
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Topper
Registered: Jul 2009
Posts: 218 |
10-23-09 06:56 PM
Nitro, I think I grasp what you're asking here.
I myself am glad to see the AMZN/MSFT news for a couple reasons. Neither are because I want to own or trade them. For me, it's because I've been waiting 10 years for the Nasdaq to make a run at 5000 again, and to hear the news that a tech titan such as AMZN is essentially at a decade long double top gets me rubbing my hands together like a contestant on deal or no deal. 2nd, seeing that we're at that sticking point of 10,000, I believe we need a catalyst here.
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FCCT
Registered: Sep 2004
Posts: 165 |
10-23-09 07:54 PM
100% agreed.
Think of it this way, what are the values behind owning shares in a private firm, there's no market to sell your shares, no gauranteed dividend, so the company can operate forever and never pay you a dime. Why would you want to own that?
It makes alot more sense to lend to the company and make a higher return than bank interest.
You could look at liquidation value or a possible buyout price.
Here is the real kicker with these public mega caps. They are too big to ever go private. They are only "bought out" by other public firms, and usually thru more shares.
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FCCT
Registered: Sep 2004
Posts: 165 |
10-23-09 07:58 PM
Every turkey that tells you to buy and hold shares for the long run makes their entire living off commissions and career off of this.
Knowingly or unknowingly financial advisers hold your hand and lead you into a fiery pit
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