Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.


A Massive String of Double and Triple-Digit Winners

A Massive String of Double and Triple-Digit WinnersThe cash keeps pouring in for Profit Catalyst Alert readers. In the past few weeks, they’ve seen gains of 31%… 135%… and even 250%. More incredibly, those profits came on the heels of another string of winners sporting gains of 56%… 100% (twice!)… and 110%. We’re letting a limited number of additional people get access to these trades. Go here for the details.



A Rumble in the Amazon Jungle

By Jim Pearce on April 6, 2018

Last week I used Facebook (NasdaqGS: FB) to illustrate the notion of “headline risk” after the company lost $100 billion in market value in less than a month when it admitted to a major security breach. Little did I know that if I had only waited a week I could have used (NasdaqGS: AMZN) as a better example; its market capitalization dropped nearly $40 billion in a single day after President Trump singled it out for unfair treatment from the U.S. Postal Service.

Reportedly, some of Trump’s business associates complained to him that their companies were suffering because of Amazon’s ability to ship products quickly and cheaply through the U.S. mail, which they believe is subsidized by taxpayers and therefore an unfair business advantage to Amazon. On Saturday, March 31 Trump tweeted, “it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars.” He went on to say, “This Post Office scam must stop. Amazon must pay real costs (and taxes) now!”

LEAPing to Conclusions

I have long felt that Amazon was grossly overvalued, but I cannot honestly say that I thought this is what would send its share price downward. I figured investors would eventually wise up to the fact that Amazon is a marginally profitable company that is only one disruptive event away from quickly becoming a hugely unprofitable business.

Amazon is (was?) the second most valuable publicly traded company in the world, yet its debt-to-equity ratio of 160 could quickly become a problem if the equity half of the equation takes a major hit since the debt side isn’t going away anytime soon. It is premature to start worrying about Amazon’s solvency, but it is not too soon to begin thinking about how Jeff Bezos intends to respond to Trump’s attack if his company’s share price keeps falling.

Perhaps the best response by Bezos would be to say nothing at all and let Trump’s attention wander to something else. Regardless of whether or not Amazon is receiving favorable treatment from the postal service, it would take an act of Congress to do something about it, which is unlikely. In the meantime, perhaps Bezos should use some of the massive cash hoard he is sitting on to buy back stock, something that his board authorized years ago but has never done.

As for me, a month ago I bought a long-term “LEAP” put option on Amazon with a strike price of $1,200 that expires in January of 2020. I already have a 20% gain in this position, but I am going to hold onto it regardless of what happens with Amazon in the short run. Near the end of last year, I predicted that Amazon would trade below $900 this year. I may end up being wrong about that, but if I am correct (by the end of next year) then I stand to make a 200% gain on my put option.

If I am wrong, then the person that sold me that put ends up being the winner since I paid a hefty premium for it. But I’m swinging for the fences this time, while that person is looking for a steady paycheck.

Worth Its Weight in…

I don’t wish ill will on Amazon or any other business but as an investor, but I have to make rational decisions based on what I see happening in the market. At the moment, I see many companies that are “priced for perfection”, only one bad quarterly report or Trump tweet away from a quick dive down the charts. I also see a few stocks that appear undervalued and may become the unwitting beneficiaries of a correction that shifts money from momentum to value stocks.

Of course, you may see things very differently from me, and you may have an entirely different approach to managing your portfolio even if we saw things the same way. That is the beauty of the stock market; it allows investors of all types to execute buy and sell orders with one another regardless of their reasons why.

Warren Buffett’s oft-stated admiration for Jeff Bezos notwithstanding, I believe in Amazon we have the ultimate example of an overvalued momentum stock that is destined for mediocrity. Amazon is not going to fail, but it’s not worth owning at 90 times next year’s profits, either. Somewhere in between is the appropriate value, and perhaps the stock market just took the first step in that direction.

Therein lays the opportunity for profit; as Buffett’s famous mentor Benjamin Graham once wrote, “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

You might also enjoy…


R.I.P Bull Market—Here’s How To Protect Your Wealth

I hope you’ve enjoyed the phenomenal bull market of the past eight years…

Because it’s about to come to a screeching halt.

The Federal Reserve’s nearly decade-long spending spree has finally come to an end.

With no other options left at their disposal, the Fed has no other choice than to raise interest rates to keep inflation in check.

And that leaves you with two options…

Do nothing and suffer the agony of watching the profits you’ve accumulated over the years evaporate right before your eyes…

Or reposition your portfolio and invest in companies which prosper as inflation rises and interest rates soar.

I think the choice is clear. And I’ll show you the best new positions you can take if you click here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.