shalab Posted January 31, 2011 Share Posted January 31, 2011 AMZN - amazon.com has a P/E of 66 and a price to cash flow in the same range. The stock has gone up significantly in expectation of outsized growth. The downside risk of a short position is if Amazon beats the analyst expectations, the stock can go up in the other direction by 20-30 points as all the shorts rush to cover. Link to comment Share on other sites More sharing options...
Myth465 Posted January 31, 2011 Share Posted January 31, 2011 Seems like a tough way to make a buck ;). A wise man once said, The market can remain ......... Link to comment Share on other sites More sharing options...
oec2000 Posted January 31, 2011 Share Posted January 31, 2011 AMZN - amazon.com has a P/E of 66 and a price to cash flow in the same range. The stock has gone up significantly in expectation of outsized growth. The downside risk of a short position is if Amazon beats the analyst expectations, the stock can go up in the other direction by 20-30 points as all the shorts rush to cover. I gather that most seasoned short sellers do not like to short stocks purely on the basis of valuation. They prefer to short companies that have a fundamental problem in their business. It's a slower way to lose money. ;D Link to comment Share on other sites More sharing options...
Myth465 Posted January 31, 2011 Share Posted January 31, 2011 Ya if I did short I would pick off the sick limping creatures at the back of the herd. You guys are going after gazelles but betting they cant fun as fast for as long. You may win but what happens if that horse is Sea-biscuit or Secretariat? Link to comment Share on other sites More sharing options...
smo001 Posted January 31, 2011 Share Posted January 31, 2011 Why not just buy puts? Limited downside but your hands might get cold from holding the ice cubes. :P Link to comment Share on other sites More sharing options...
Myth465 Posted February 3, 2011 Share Posted February 3, 2011 Even Tilson is starting to get it. T2 Partners January Letter - Eating Some Humble Pie On Short Selling Mistakes Stock selection Over time we’ve been quite successful shorting fads, frauds, promotions, declining businesses, and bad balance sheets. Where we have had much less success, however, especially in recent months, is shorting good businesses that are growing rapidly, even when their valuations appear extreme. Such open-ended situations, regardless of valuation, are very dangerous, so going forward we will avoid them entirely unless we have a high degree of conviction about a specific, near-term catalyst. Netflix Since we first wrote to you in December about our Netflix short position, we have received quite a bit of new information including results from our survey, input from investors, and the company’s recent earnings release. We are still digesting this information, which has both bullish and bearish implications, and will write to you about our conclusions in the near future. Link to comment Share on other sites More sharing options...
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