My Stock Winners

Bubbles in markets are, as the name implies, unsustainable. They are manifested by inflated prices that go up and up to achieve unthinkable levels for awhile. But inevitably, the bubble pops, with the unfailing result that prices soon thereafter drop back to earth. Thus, like their soap-bubble counterpart bubbles in the market clearly lack something even more fundamentally important- they lack reality.

There is one very strange thing about bubbles. Even though prices are out-of-line with value based on any prudent historical measure, people don’t react as one would logically think, Instead of recognizing a bubble for what it is, people instead tend to rationalize why prices are so high. They try to explain to themselves why prices are supposedly reasonable.
This attempt to rationalize what is illogical and abnormal is a unique characteristic of bubbles. But it is not too difficult to see why this thinking happens.

When you are living in a bubble, it is very hard to accept the fact that you are indeed in the middle of a bubble. The reason for this inability to perceive foolhardy thinking is that most everyone acts as if there were no bubble. Everybody is saying, doing and thinking the same thing. This mutual & identical action reinforces one’s view to mistakenly believe that what they are thinking is correct & normal instead of what it really is, namely, the illogical & abnormal pervasive thinking that is found in a bubble.

We heard it all before-the reasons-new economy; advance in technology, increased technology, increasing production, inflation is under control. –In Short, its different this time, but in reality its never different. —
Only when the bubble pops does the bubble become obvious.

AMZN is overvalued by any normal fundamental analysis.

You want to compare AMZN to EBAY and YHOO.

Why don’t you compare the Balance Sheets and Earning Stmts of both of them to AMZN’s and you will see they are much stronger. You will discover that they have more cash, less liabilities, and much greater stockholders’ equity. They are also much more profitable and have much higher Free Cash Flow.

AMZN has $1.2 bn in long-term debt and $3.3 TTL Liab, ($1.4bn in Cash and Invtms),

EBAY has no Long-Term Debt with $2.7 bn TTL Liab, ($3.3 bn in Cash and ST Invstms

YHOO’s LT Debt is around $700ml with TTL Liab of $2.5bn (they have $2.4 bn in cash and invstms)

You will find that all of their financial ratios are also better. You emphasis on free cash flow is not that meaningful.