Amazon shares - risk to reward ratio?

Secret2ndAccount

A couple of thoughts:

Amazon is not just a shopping site; it is also a cloud company - Amazon Web Services - one of the biggest in existence. The shopping site has huge market share, so it's reasonable to ask if this restricts future growth. The cloud company has no such constraints. If it continues to execute as well as it currently does, there is potential for enormous growth, and the business becomes more efficient as its size increases. So there is plenty of potential for profits to continue to grow.

If you have made a profit on a stock, and are contemplating upside vs downside, one strategy is to take out your original investment. Then you are playing with the house's money. If it goes up five times, that's great. If it goes to zero you have lost nothing.

Thrugelmir

Secret2ndAccount said:

A couple of thoughts:

Amazon is not just a shopping site; it is also a cloud company - Amazon Web Services - one of the biggest in existence. The shopping site has huge market share, so it's reasonable to ask if this restricts future growth. The cloud company has no such constraints. If it continues to execute as well as it currently does, there is potential for enormous growth, and the business becomes more efficient as its size increases. So there is plenty of potential for profits to continue to grow.

If you have made a profit on a stock, and are contemplating upside vs downside, one strategy is to take out your original investment. Then you are playing with the house's money. If it goes up five times, that's great. If it goes to zero you have lost nothing.

Amazon isn't the only Company in the space. Nor was it successful in China. Chinese companies are in it for the long haul. 

AnotherJoe

ZingPowZing said:

AnotherJoe, it looks from the above, and other of your your posts, that you are doing really super, running up big positions in the likes of Apple and Tesla. Well done again.

I'm just wondering how that fits with your advice from August '19.

Isn't one of the main points of investing in a multi asset fund that contains shares in a lot of individual companies simply to avoid losing a large proportion of your money as you could if you were to invest in just four companies and one of them was destroyed by some internal financial scandal or the like?

"I agree, but it was ZPZ who suggested just 4 shares which brings in the random element you mention.

If you wanted to pick your own I'd suggest minimum 10 and better 20 for the reasons you mention, and 50% of those should be ITs or ETFs as well.

My strategy is a backbone of global pooled investments (ITs funds and ETFs) and direct shares plus pooled investments to emphasis particular areas (in my case, healthcare and sustainable energy). Plus the odd wildcard side bet."

Well it's hard to recall back that far, but It wasn't advice, it was a comment on the strategy of holding a multi asset fund.  Eg people who hold a multi asset fund do it for those reasons. I didn't say you either should or shouldn't hold such a fund, it's a comment on why those who hold such a fund, do so.
it's a classic misunderstanding  that when someone say "here's why people do x" to interpret that as meaning that the person is advocating that people should do x. 

Moe_The_Bartender

I listened to a Terry Smith podcast the other day. He didn’t get why Amazon was such a big beast and likened it to a charity funded by Wall Street.

Steve182

Moe_The_Bartender said:

I listened to a Terry Smith podcast the other day. He didn’t get why Amazon was such a big beast and likened it to a charity funded by Wall Street.

That's an interesting comment from Smith. I admire Smith and hold both Fundsmith and Smithson and I'm quite surprised he said that. Buffet was once asked in an interview for the reason why he had never invested in Amazon, "stupidity" was his reply

Steve182

Thrugelmir said:

Secret2ndAccount said:

A couple of thoughts:

Amazon is not just a shopping site; it is also a cloud company - Amazon Web Services - one of the biggest in existence. The shopping site has huge market share, so it's reasonable to ask if this restricts future growth. The cloud company has no such constraints. If it continues to execute as well as it currently does, there is potential for enormous growth, and the business becomes more efficient as its size increases. So there is plenty of potential for profits to continue to grow.

If you have made a profit on a stock, and are contemplating upside vs downside, one strategy is to take out your original investment. Then you are playing with the house's money. If it goes up five times, that's great. If it goes to zero you have lost nothing.

Amazon isn't the only Company in the space. Nor was it successful in China. Chinese companies are in it for the long haul. 

I totally agree. I'm also invested in Baba, JD and Tencent, to a combined value roughly equivalent to my holding in Amzn.

Steve182

Secret2ndAccount said:

A couple of thoughts:

Amazon is not just a shopping site; it is also a cloud company - Amazon Web Services - one of the biggest in existence. The shopping site has huge market share, so it's reasonable to ask if this restricts future growth. The cloud company has no such constraints. If it continues to execute as well as it currently does, there is potential for enormous growth, and the business becomes more efficient as its size increases. So there is plenty of potential for profits to continue to grow.

If you have made a profit on a stock, and are contemplating upside vs downside, one strategy is to take out your original investment. Then you are playing with the house's money. If it goes up five times, that's great. If it goes to zero you have lost nothing.

I've thought about the strategy of taking out the original investment. Problem is at present I don't see a better (ie potentially favourable risk/reward option) for the proceeds without going overweight on other investments. My current thoughts are to wait and see if I can double up from where we are now, ie increase from $3250 to $6500 / share in the next 3 to 5 years maybe, then sell half. 

Secret2ndAccount

Steve182 said:

... My current thoughts are to wait and see if I can double up from where we are now, ie increase from $3250 to $6500 / share in the next 3 to 5 years maybe, then sell half. 

If you think there's even a 50% chance it will double within 5 years, you should buy more.

Voyager2002

johnwic said:

Can anyone suggest to me which is shares are best right now!
Please guide, thanks!

All of them.

Steve182

Secret2ndAccount said:

Steve182 said:

... My current thoughts are to wait and see if I can double up from where we are now, ie increase from $3250 to $6500 / share in the next 3 to 5 years maybe, then sell half. 

If you think there's even a 50% chance it will double within 5 years, you should buy more.

Judging by past and current growth rates I think the chance of that happening is at least 50%.

I started buying at around $1000 about 3 years ago. I also know that a high expectation of future growth is factored into the price. If confidence in future growth drops off significantly the price could half or worse.

I've considered buying more but decided that I already have enough exposure to that risk with my current holding .