Sunday, May 28, 2017

[AMZN] shares are a straight up joke.

If you want to see the madness of crowds (herds) in action, look no further than the shares of Scamazon.  At nearly $1000 per share they are now sporting a PE that would make most dot bomb companies blush.  The reason for all of this un-backed bullishness is that every couple months the company releases more news about more expansion, each endeavor more difficult and audacious than the next.  If there is a tech buzzword for more than a couple months on the internet, Amazon sends out a press release about entering the market.  The past performance in running an online retailing operation has been good enough that if Amazon announced they were going to start building space rockets so that they can begin mining operations on the moon in 2020, it would probably double the stock overnight.

But after several big announcements without any follow through the market (drone based delivery, amazon as a shipping company, freight forwarder, self driving cars, etc.) which is like a heroin junkie looking for the next fix, is going to begin to worry that the dealer has been busted by the cops and that the next fix might not be coming.  Well, when the stock is going straight up like this, the crash will be just as dramatic when it happens.  It makes me laugh that after all this time people still cannot figure out that you don't chase a stock going straight up, you short it with options where loss is limited and you do it at Elliott wave defined entry points.

Right now Amazon's cash cow is AWS, Amazon Web Services.  AMZN would be bleeding cash if not for AWS .  But web services is a business with low barriers to entry (Microsoft is now hot on the trail) and it is a business that depends on the consumer economy just going up each year.  Look at all the major players that AMZN is now in direct competition with.  How many fronts can they really fight major battles on??

Additionally, the simple exponential shape of the chart tells me something untoward is likely happening, perhaps similar to Wells Fargo fraudulent account openings, etc.  I cannot tell you what it is and for the benefit of Amazon lawyers I don't have any proof of wrong doings but I do not need to either because the chart is aggregating in its wave structure all that is happening under the covers and the chart is telling me that something is wrong here.  When you see rat droppings, how far away can the rat be?

I know that all this seems counter-intuitive.  I KNOW, I know.  After all, even Buffett came out with over the top praise for Bezos of late and they had a little bromance exchange in the news.  From Buffett's side, he said, "I've never seen a guy succeed in two businesses almost simultaneously that are really quite divergent in terms of customers and all the operations...  I can't think of another example like it".  OK so pay attention folks because we now have one of the most experienced business watchers in the history of mankind telling us that there is something new under the sun, its different this time, it seems like a miracle, etc.   I am convinced that Buffett believes all this crap.  I am also convinced that Buffett is lighting his legacy on fire and then pissing gasoline all over it with these kinds of statements because it is driving people to have confidence in the late stages of some obvious form of Ponzi.  How do I know it's a Ponzi?  Simply because exponential shit of this scale does not happen in real economic life. The law of big numbers catches up to everyone.  Something is wrong here and Buffett should be asking for an independent examination of Amazon's books instead of praising Bezos as if he were the son Buffett never had.  Bezos, upon hearing Buffett melt all over him on camera simply replied that the comments were very meaningful and that he'd read all Buffett's books.  Hugs and kisses all around.

I will say again for the record that a clearly stated view of mine is that the big names who profited from the fake money boom of the past 50 years will go into complete disgrace come the bust.  Until about 18 months ago I was beginning to wonder if I got it wrong when I specifically called out Buffett as one whose name would get dragged through the mud in all this.  Why?  Because up until recently Buffett kept mainly to himself, stuck to his knitting.  But now he's in the news every other week pumping the stock market like crazy.  He's telling everyone to chase stocks and his words are akin to saying that the stock market is a wealth generation machine of unlimited power where all you have to do is deposit a little money today and without doing any work your money will multiply for you.  I know that these are the kinds of things I expect to see at major peaks.  We are probably within a few months of a major peak.  If the momentum lets off at all, AMZN shares will plummet.  Not if but when.

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