You keep going on about the law of large numbers...That is something insurance folks bang on about, yes? Amazon is probably going to double in value in 20 years, just how 20 years ago there was no Amazon to speak of. And here we are.
LOL keep going on and on...WTF are you talking about? Sorry to bust your assumption but not an insurance guy, never was, it was part of my Finance undergrad, long ago if that makes you happy. Sound like a douche am I right? Common sense, should tell you as a company gets larger it has trouble maintaining growth, once that happens, it is no longer, a growth story, so faces multiple compression. Apple mints money, has $250B in the bank, but can't get any closer to $1T then they were before as they have little growth and do buybacks and dividends like mature companies do. MSFT actually grew nicely in the 2000's, stock went nowhere. Google mints money and is growing, been around $1000 since May. Why do you think mid-caps have returned 1600% since mid-90's trouncing large caps? Alibaba was worth $2B roughly in 05' with Yahoo getting 45% on $1B, when Silver Lake invested it was $36B in 2012. At IPO, in 2014, they made 10X's their money...Yahoo which sold off stakes had $25B, they sold $15B in 2 tranches, had 40X's their money, more considering they still have a 15% stake as Altbaba. In 10yrs it went from $2B valuation to $231B at IPO! Only cause of it almost doubling in the past year, is it at $436B, and while I have followed both...one since 98'/99' and BABA since 08', BABA has way better financials. Maybe, Amazon does it, maybe not, but there is a reason no company is worth $1T, the move from $500B+ is tough. Wal-Mart has gone nowhere in 5yrs, Exxon, same thing. You'd have to be mighty naïve or a dunce to think law of large numbers doesn't matter. I know it's a cult stock, am a fan, trade it regularly, but in the end fundamentals matter, they always do! Add in a macro environment, that will include interest rate hikes, and eventual recession, it's even more doubtful, as the cheap money comes to, an end.
Wow. The law of large numbers has nothing to do with static companies making monies.. It has to do with companies assuming risk. Insurance...Mortgages and what not. I never assumed you sounded like a "douche". And I am a high-school drop-out. Apple does not "mint money". I am so happy that your college education has taught you so well. MSFT grew nicely in the 2000s? What about in the 1990s? Not so good? Stock went nowhere? Google mints money? You need to reduce your Starbucks intake, dude. Just be like the Dude. What are YOU on about? Dude?
Well, here in the Finance world it means this: In a financial context, the law of large numbers indicates that a large entity that is growing rapidly cannot maintain that growth pace forever. The biggest of the blue chips, with market values in the hundreds of billions, are frequently cited as examples of this phenomenon.(http://www.investopedia.com/terms/l/lawoflargenumbers.asp) It's cool, a figured you had trouble with basic comprehension, but you had to figure there was another definition being yours doesn't apply here? Apple made $46 BILLION in net income, has more money then, the Federal Government, yes it mints money or are you taking it LITERALLY?hahahahahahaha Wow! Amazon made $256M, 1/160th of Apple, and while Amazon could certainly take that to a few billion, per year, if they wanted by reducing R&D and shipping, they're nowhere close to Apple. Apple makes a yearly Amazon, per week. Microsoft, grew like crazy in the 90's, and double digit growth in the 2000's but real money was made from 86'-2000' with a good chunk in the past 2-3yrs under Nadella. My examples, are all mega caps, making tons of money, and whether they have huge growth like Google or stalwart like Wal-Mart or Exxon(most times make tons of money), none can carry their monopoly to $1T and they each make tens of billions or more in net income. Alibaba is probably, the dark horse, to do it though. IMO, you'd need a huge overall bull market(we have it), market dominance(Amazon has it), and a fundamental component with huge growth. If Apple had another IPhone cash cow it'd be close. They just haven't found another and competitors Samsung and Xiamoni have comparable phones. As for Starbucks, I hate it, couldn't pay me to drink coffee and I like, my money, so don't waste it on highly overpriced drinks. A person could fund their retirement by cutting out their 1 latte daily habit. If that Investopedia link can't help you with its example(s), then sorry "dude".
Seems like Amazon has found the perfect new scam: 1) Buy profitable company xyz for $14 billion using ultra cheap debt. 2) Guide the following quarter EPS lower, citing "merger and acquisition flow-through costs." 3) Tack-on acquired companies revenue and EPS in the following quarter that you just guided lower. 4) Announce better-than-guided earnings and revenue, simply from the tack-on of the acquired company. 5) Let Mr. Market instantly salivate over your earnings, not being able to realize what happened, and subsequently add $60 billion to your market cap. To summarize: $14 billion acquisition using ultra-cheap debt, hold for 2 months, gain $60 billion in added market cap from fools.
I know AMZN permabears who said the stock was a fraud since when it was <$200. They never admit how much they've lost.