Post of the Day
June 2, 1998
Subject: PE1K Issue will not hurt AMZN
emildlux, forget about that silly Y2K stuff. The S&P 500 is at a record 28 times earnings (the mean PE at earnings peaks over the last 75 years was 11.4 times earnings) and so some computer problem is not going to stop AMZN or the S&P 500. While I agree with the two excellent previous posts on e-commerce, i.e. it is a revolution for us, the consumer and not for the margin squeezed sellers, I think in this one case, on-line book selling, there can be no stock overvaluation. Don't you finally see the big picture here? Let go. Trees DO grow to the sky. I had trouble with all this stuff until I finally accepted that. Only two things could hurt AMZN's stock price growth to $400 per share at this point: market liquidity and another computer problem but both will be easily solved I think.
|"No one in the 50's and 60's ever thought PE ratios could go over 3 digits, so there is a temporary computer glitch when Amazon.com goes to 1000 times year 2005 earnings."|
Good news: $21.97 billion poured into domestic equity mutual funds in April (that's good, see, cause demand is robust). The mutual funds, in turn bought $31.4 billion of stock or 6 times more than a year ago (this is even better/more robust). Best of all is that because the Mutual Fund Managers are spending more than is coming in, market liquidity is going to hell in a handbasket. Cash reserves for Mutual Funds are down to $88.95 billion or a record low 3.7% cash. (The big boys are in a panic over these numbers) Why is this good, you ask, if they are running out of money?
Because my idea is a new kind of Institutional credit card. If the little guys can buy Mutual Funds with a credit card, why don't we issue cards to the fund managers for them to make purchases of AMZN and other stocks as well? At April's burn rate, the Mutual Funds will have burned up all their cash in six more months and go into NEGATIVE liquidity but, that's the point they start to use their new MBNA Platinum Plus Institutional Visa Card to make future purchases.
The bears are dolts. Nothing can stop this freight train..........uh oh, there is the PE1K problem. No one in the 50's and 60's ever thought PE ratios could go over 3 digits, so there is a temporary computer glitch when Amazon.com goes to 1000 times year 2005 earnings. But unlike some of you negative nabobs on this board, I have faith that we can work it out in what I know will be an ever sunnier future.