In Search of the Perfect Investment

I have no idea how long this painful tech downdraft will last.

Nor am I comfortable selling into it, since this could turn on a dime.

I don’t see a systemic financial failure looming — like we had in 2008.

And I don’t see the economy seriously faltering. In fact they just upped the Q4 GDP estimate from 2.5% to 2.9%.

The fear of a Trade War seems also to have ebbed.

Trump has signed a nice trade deal with South Korea on cars.

And I’m guessing he’ll sign one shortly with China — which will lift a cloud.

So, gritting our teeth — and not obsessing with moment-to-moment stock prices on our computer screens makes sense. If you have the stomach.

My personal “problem” is that I’m heavy into a handful of tech stocks I love — AMZN, SQ, NFLX, and NDVA. These four have been taking it heavily on the chin.

In conrast, tech stocks, MSFT, ADBE, CRM, NEWR and GOOGL are hanging in there.

To state the obvious: The stockmarket is a bundle of collective weird and wonderful emotions. A stock gets buzz — on BubbleVision, in the financial press, on the blogs — it rises. Tech stocks have the heaviest emotions. That also makes them hard to predict. My big position in Amazon comes from my faith in Jeff Bezos, one of the world’s best entrepreneurs. And despite the recent pullback, I’m up big time with AMZN. I hope you are too.

What’s most amazing is just how wrong Wall Street analysts can actually be.

Today I Googled “What’s wrong with Amazon’s stock?” and found this story:

The story from the Wall Street Journal’s MarketWatch begins:

CHAPEL HILL, N.C.-Bad news, Amazon investors: The company’s stock, already down 10% from its late-July high, is likely to decline even further.

That’s because of the behavior of Wall Street analysts, whose earnings revisions tend to come in waves. And the vast majority of those revisions recently have been to the downside.

This represents a big shift from the situation that prevailed as recently as 12 months ago. In August of last year, for example, 69% of Wall Street analysts who track Amazon AMZN, -3.52% revised upward their estimates of the company’s future earnings per share. Just 17% of analysts issued downward revisions that month.

So far this August, in contrast, there have been no upward revisions and 93% of analysts have issued downward revisions, as this chart shows. This is despite the company winning FTC approval for its intended takeover of Whole Foods Market US:WFM

OK. This sounds awfully depressing — until you realize the article was published on August 26, 2017. And the chart of Amazon in the last year has looked like this:

I added the black arrow in. That was where Amazon’s stock was when the negative MarketWatch article was published!

Had you believed the article and sold your stock back then when Amazon was around $956, you’d be kicking yourself. It’s now trading around $1433 — 50% higher.

Skiing Copper Mountain.

This short video is priceless.

Harry Newton.

If you really want to, you can read the full MarketWatch piece here.