Tuesday, July 7, 2009

Short Amazon, long the Library

I'm short AMZN, and it still annoys me how this stock trades. But let's look at how easy it is, to construct the bearish argument.

The Kindle is supposed to take over the world. Who do you know has a Kindle besides Oprah?

Who is going to buy a Kindle when you can get an AAPL app and read your books on your iPhone? And pay all of .99 for all the classics you'd ever want to read?

And how about the AMZN affiliates? Aren't they being cut by the thousands? Nobody wants to pay sales tax. If AMZN has to start collecting tax, their margins will go to hell.

Have you ever walked in a library lately? Have you seen how busy it is? Who is going to buy a book on Amazon?

Do you know libraries are so busy that they now have electronic voice mail that alerts you when your books are overdue? Do you think they had that last year?

And that's AMZN. It's sooo last year!

Who needs it? Especially at 40X earnings!

And that's the 30 second story.

It sells!

Now construct a bullish argument for AMZN without stuttering.

Isn't that an accurate representation of the current market psychology?

Last weekend, my daughter had picked up a "Happy Days" DVD at the wonderful library near our house. Soon she was singing the Happy Days theme song and doing 50's dancing in the house. And at the start of every new episode, I had to hear the Happy Days theme song again.

At first it drove me nuts, but after a while it sort of grew on you, probably because I knew the DVD was going back to the library!

And that's this market.

Just be glad you're in rentals!

1 comment:

Anonymous said...

good work, now this is kinda post i love to read on your blog!