“Fatbrain.com sells computer/tech books and — don’t ask me why — Andrew Tobias books. Follow this link to save $15 on an order of $15 or more: www1.fatbrain.com/offers/tryus/?/from=jae795 . Valid through May 28. You are welcome to reprint this message if you wish, but please say ‘a reader from Lewisburg, PA’ rather than using my name.” — John Stephens, Jr.

Thanks, John. (I can’t vouch for fatbrain.com, having more of a swisscheesebrain.com myself, but I did visit the link, and it would appear that if there’s a $16 book you want today, it will cost you $1 plus shipping.) (Also, I’m kidding about the guy’s name. I just made up ‘John Stephens, Jr.” to see if you were paying attention.)


R.T. Schoen (his real name), had this to say about My Three Astonishing Panelists: “Yes, yes, but are you still short AMZN?”

Yes, yes. I am. Some. But I’ve taken a lot of tax losses. The psychology of the thing is that if you short something high enough, it’s easy to stay short as it bobs up and down around and below your entry price. But if, like me, your timing was awful, and you shorted it after it was up eightfold but before it was up twenty-fold, it’s very tough not to take some losses and reduce your risk when you have the opportunity … even if you would never normally buy the stock at this price. (Largely irrational though it is, buying-to-cover is psychologically different from plain old buying.) Also, to its credit, Amazon continues to do a great job — but that part I never doubted. I still think it’s way ahead of itself and risky, though a bit less so at $114 than at $221.

It’s simply not clear yet just how much profit there is to be made in this intensely competitive field. Amazon certainly has as good a shot at it as anyone on the horizon, and has used its inflated stock to take big pieces of other, related companies like drugstore.com. But at $18 billion, Wall Street is assuming an awful lot will go right. It is valuing AMZN as highly as it values fat old profitable behemoth Sears. Both currently are valued at about $18 billion.

Yes, you can say this is sensible: Sears is stuck with all those bricks and mortar. AMZN is the future of retailing. Like a money-losing automobile company versus a profitable buggy manufacturer in 1902. (Don’t hold me to the exact year.)

But wait. How about 1990, say, when almost no one, least of all Wall Street day traders, had any inkling of on-line sales? Back then, Sears had a market cap far lower than the $18 billion valuation it sports today. Throughout the Seventies and Eighties and most of the Nineties, Sears was valued lower than Amazon is today. Yet Sears had a fairly large share of the country’s retail sales. Let’s assume AMZN one day soon will, too. Will its profit margins be so much higher than Sears’s were? And will the barriers to entry in retailing be greater or lesser than those that, partially, protected Sears? It would seem to me that the barriers to entry for on-line sales are a lot lower. And that on-line price competition will be even more intense, because it’s so much easier to go “from store to store” to hunt for the best buy. No need to move the car.

Also, as has been endlessly pointed out, investors in the pioneering automobile companies wound up not being the ones who made a lot of money.

None of which is to say AMZN will not eventually grow into this remarkable market cap, let alone to knock the great job AMZN is doing. Yes, you can buy what it sells cheaper if you simply click a different URL. But AMZN is always likely to provide the best, or near-best overall on-line shpping experience if you don’t mind paying a bit more.

So, yes, I’m still short. But even less than before. Given my knack for bad timing, that probably means it has a lot further to drop.

Have a good weekend!


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