AMZN - Amazon.com Inc.

[Picasso]

So then what's the value and how does it compare to the current share price?

[rpadebet]

So then what's the value and how does it compare to the current share price?

 

I think the retail piece is worth about 150-180b. (i think it is fair to assume they would move about 500b of GMV globally in about 10 years. About 3x current GMV)

A lot depends on how you value AWS and the other options. For AWS sales were 7b @25% margins growing at 70% last year. The total addressable market is huge. Competition is strong. This part is hard to value within a tight range because the economics might change depending on the competition, but I think it is worth at least 50b

 

So I would consider buying between $400-450. It was almost there in Feb before they instituted their 5b buyback

[Picasso]

So if AWS is worth $100B and retail is somehow worth $500B, I'll make 9% for the next ten years?  Seems like a low return for everything to go right. AWS would need to be worth 2x what IBM is worth today to make a bit more. I dunno seems like a fifty foot hurdle here what am I missing?

[Palantir]

I don't see how you get to 9%.

[cmlber]

If your fulfillment centers are closer to end consumer compared to your competitors fulfillment centers, don't you think you can deliver packages quicker/cheaper assuming all competitors use UPS at same price? Can that lead to increased sales at your company compared to competitors? Does it now cost you more to sort that marginal package?

 

Yes.  The question is, how much is that advantage worth.  Shipping costs are 10% of sales.  If AMZN is a few percent more efficient, does it matter (relative to the market cap)?  If this was a $20 billion company I'd be excited about those advantages.

 

If you are using robots to do it and comps are using humans, do you have a variable cost advantage?

 

Everyone is, or will be, using robots.  This is not a competitive advantage.  AMZN paid $775 million for Kiva, the company that makes its robots.  The superiority of their robots is maybe worth that.  And they paid for it...

 

Also considering you ship tons more through UPS compared to your competitors, and since UPS is gaining their scale through you, is it possible to negotiate favorable shipping rates with UPS compared to your competitors?

 

Yes, but marginally.  There are only three options, and AMZN is a low single digit percentage of their volume.  They can afford to lose all of AMZNs business.  AMZN can't afford to lose them.

 

I think this is how scale helps on the demand side of things....

 

I agree.  The question is, what are all these benefits worth?  Maybe e-retailers as a whole will have 2-3% margins and AMZN will have 3-4% margins.  That sounds reasonable and credits them for having a wide moat.  But this price implies nobody will ever compete with AMZN in ecommerce and at some point, it can flip a switch and generate better than WMT margins.

[Picasso]

$260 billion to $600 billion over ten years is 9%.

[Palantir]

$260 billion to $600 billion over ten years is 9%.

 

This 10 year timeframe is arbitrary, the undervaluation could be gone tomorrow for all you know, making it a 130% return. But if we assume 10 years, the IV at the end of 10 years will be significantly greater than $600B. $600B is the present value, not the future IV.

[Picasso]

No, just using rpadebet's numbers the future value is $600 billion or so.  Definitely not the current value... The value gap could be gone tomorrow but that's not something you can count on.  That's just greater fool.

 

Amazon isn't doing $500 billion of GMV yet but in ten years they very well might.  I'm just using rpadebet's outlook even though I could see it larger than $500 billion.

 

And I'm saying AWS might be worth between $100-200 billion in ten years, also a pretty aggressive outlook.  Either way you might make 9% or 11% for everything to go perfectly.  The only way I think you win here is if you hold it for twenty or thirty years, you'll probably do a lot better than the S&P if they continue to dominate this way.  But it's already pricing in so much of the relatively near future.

 

There's also this new smugness with Amazon shareholders.  It's sort of like "look how smart I am to see how valuable this company is despite showing no GAAP profits."  The sell side is in complete agreement as well so it's not like you're taking a minority view anymore.  It just feels like going long Amazon among the "value" community has become such a consensus trade versus five or ten years ago.  Again, not a 1-foot hurdle....

 

I do agree with others that Amazon is in a position to compound for a long time.  I just don't think it's compounding off a current intrinsic value that is anywhere close to the current share price.

[rpadebet]

No, just using rpadebet's numbers the future value is $600 billion or so.  Definitely not the current value... The value gap could be gone tomorrow but that's not something you can count on.  That's just greater fool.

 

Amazon isn't doing $500 billion of GMV yet but in ten years they very well might.  I'm just using rpadebet's outlook even though I could see it larger than $500 billion.

 

And I'm saying AWS might be worth between $100-200 billion in ten years, also a pretty aggressive outlook.  Either way you might make 9% or 11% for everything to go perfectly.  The only way I think you win here is if you hold it for twenty or thirty years, you'll probably do a lot better than the S&P if they continue to dominate this way.  But it's already pricing in so much of the relatively near future.

 

There's also this new smugness with Amazon shareholders.  It's sort of like "look how smart I am to see how valuable this company is despite showing no GAAP profits."  The sell side is in complete agreement as well so it's not like you're taking a minority view anymore.  It just feels like going long Amazon among the "value" community has become such a consensus trade versus five or ten years ago.  Again, not a 1-foot hurdle....

 

I do agree with others that Amazon is in a position to compound for a long time.  I just don't think it's compounding off a current intrinsic value that is anywhere close to the current share price.

 

Yes,I also think current price is already pricing in near future. I agree that on a "retail+AWS only basis" there is no excess value there unless you hold long term like you said. I think the attraction here  at least for me at the right price is :

 

A) Extremely long runway

B) secular tail winds for growth in each field

C) Reinvestment opportunities at high marginal rates

 

Yes they are going to make the "fire phone" kind of mistakes, but they have some optionality in media, advertising etc which could potentially be source of excess returns because they can leverage their existing platform and scale.

 

I wouldn't call it traditional value. Even GARP is a stretch definition. Maybe the new term for this, BIDU, TSLA and such is "Growth at fair price with optionality". Dismissing these as Momo or Fang is also probably "smugness" among some non-investors.

[rpadebet]

And the greater fool theory isn't such a bad bet. If you wait long enough, especially in these low negative interest rate times, a greater fool does come around.

I can attest to that as I have been on both sides of that trade just recently  ;)

[plato1976]

An interesting question to me is, who's more undervalued (or less overvalued) now: google or amazon

 

No, just using rpadebet's numbers the future value is $600 billion or so.  Definitely not the current value... The value gap could be gone tomorrow but that's not something you can count on.  That's just greater fool.

 

Amazon isn't doing $500 billion of GMV yet but in ten years they very well might.  I'm just using rpadebet's outlook even though I could see it larger than $500 billion.

 

And I'm saying AWS might be worth between $100-200 billion in ten years, also a pretty aggressive outlook.  Either way you might make 9% or 11% for everything to go perfectly.  The only way I think you win here is if you hold it for twenty or thirty years, you'll probably do a lot better than the S&P if they continue to dominate this way.  But it's already pricing in so much of the relatively near future.

 

There's also this new smugness with Amazon shareholders.  It's sort of like "look how smart I am to see how valuable this company is despite showing no GAAP profits."  The sell side is in complete agreement as well so it's not like you're taking a minority view anymore.  It just feels like going long Amazon among the "value" community has become such a consensus trade versus five or ten years ago.  Again, not a 1-foot hurdle....

 

I do agree with others that Amazon is in a position to compound for a long time.  I just don't think it's compounding off a current intrinsic value that is anywhere close to the current share price.

 

Yes,I also think current price is already pricing in near future. I agree that on a "retail+AWS only basis" there is no excess value there unless you hold long term like you said. I think the attraction here  at least for me at the right price is :

 

A) Extremely long runway

B) secular tail winds for growth in each field

C) Reinvestment opportunities at high marginal rates

 

Yes they are going to make the "fire phone" kind of mistakes, but they have some optionality in media, advertising etc which could potentially be source of excess returns because they can leverage their existing platform and scale.

 

I wouldn't call it traditional value. Even GARP is a stretch definition. Maybe the new term for this, BIDU, TSLA and such is "Growth at fair price with optionality". Dismissing these as Momo or Fang is also probably "smugness" among some non-investors.

[KJP]

If you want to make 15% returns over the next five years, the shares would have to increase to about $1100/share.  Assuming continued dilution results in about 550 million shares outstanding in five years, that's a market cap of about $600 billion.  Here's a set of assumptions that could get there:

 

AWS grows at 50% per year and reaches 20% EBIT margins, resulting in a business that in five years is run-rating at about $60 billion in revenue and $12 billion in EBIT.  At 20x EBIT, this business is worth $240 billion.

 

Marketplaces currently does about $130 billion in third-party GMV, producing about $13 billion in revenue.  [Estimates taken from this article:  http://www.channeladvisor.com/blog/?pn=scot/deep-dive-into-amazons-q4-results-for-sellers-whats-cool-100b-and-200b]  Marketplaces grows at 25% per year and reaches 30% EBIT margins (similar to EBay), resulting in a business that is run-rating at about $40 billion in revenue and $12 billion in EBIT, implying third-party GMV of about $400 billion.  At 20x EBIT, this business is worth $240 billion.

 

First-party retail currently does about $94 billion in sales.  It grows at 15% per year and reaches 4% EBIT margins, resulting in a business that does $190 billion in sales and $7.5 billion in EBIT.  At 15x EBIT, this business is worth about $115 billion.

 

Add them all up, and you get about $600 billion.  This scenario puts zero value on various other initiatives, but I nevertheless think it contains a very rosy set of assumptions, and even then the return is only 15% per year.  That's why the current price is still too high for me, even though I think Amazon is a great business. 

 

If you want to see the assumptions of someone who thinks the shares will worth more than $2,000/share by 2020, see the valuation discussion at the end of this article:  https://oraclefromomaha.wordpress.com/2015/12/07/amazon-and-world-domination/

[ni-co]

If you want to make 15% returns over the next five years, the shares would have to increase to about $1100/share.  Assuming continued dilution results in about 550 million shares outstanding in five years, that's a market cap of about $600 billion.  Here's a set of assumptions that could get there:

 

AWS grows at 50% per year and reaches 20% EBIT margins, resulting in a business that in five years is run-rating at about $60 billion in revenue and $12 billion in EBIT.  At 20x EBIT, this business is worth $240 billion.

 

Marketplaces currently does about $130 billion in third-party GMV, producing about $13 billion in revenue.  [Estimates taken from this article:  http://www.channeladvisor.com/blog/?pn=scot/deep-dive-into-amazons-q4-results-for-sellers-whats-cool-100b-and-200b]  Marketplaces grows at 25% per year and reaches 30% EBIT margins (similar to EBay), resulting in a business that is run-rating at about $40 billion in revenue and $12 billion in EBIT, implying third-party GMV of about $400 billion.  At 20x EBIT, this business is worth $240 billion.

 

First-party retail currently does about $94 billion in sales.  It grows at 15% per year and reaches 4% EBIT margins, resulting in a business that does $190 billion in sales and $7.5 billion in EBIT.  At 15x EBIT, this business is worth about $115 billion.

 

Add them all up, and you get about $600 billion.  This scenario puts zero value on various other initiatives, but I nevertheless think it contains a very rosy set of assumptions, and even then the return is only 15% per year. 

 

And after that, Amazon's growth (outlook) equals GDP growth? I largely agree with your calculation but I think the extremely long runway is the reason why you don't need such rosy assumptions. Amazon is going to outgrow GDP for a very long time and that's what makes it so attractive to me. Yes, it doesn't look cheap based on a five year outlook. But what I like about it is that its outlook is so much better than the GDP outlook—which is awful. I don't think that people are valuing sustainable growth highly enough in this environment.

 

My hypothesis is that this kind of sustainably growing company will become much more valuable as soon as people realize that the slow-growth environment that we have since the financial crisis is here to stay. For me, Amazon is a relative value bet. Yes, you may get it for 50% off in the next few months but when this is the case WMT will at least have halved in price, too. Amazon will hardly, if ever, be cheap on a comparative basis.

[KJP]

 

And after that, Amazon's growth (outlook) equals GDP growth? I largely agree with your calculation but I think the extremely long runway is the reason why you don't need such rosy assumptions. Amazon is going to outgrow GDP for a very long time and that's what makes it so attractive to me. Yes, it doesn't look cheap based on a five year outlook. But what I like about it is that its outlook is so much better than the GDP outlook—which is awful. I don't think that people are valuing sustainable growth highly enough in this environment.

 

My hypothesis is that this kind of sustainably growing company will become much more valuable as soon as people realize that the slow-growth environment that we have since the financial crisis is here to stay. For me, Amazon is a relative value bet. Yes, you may get it for 50% off in the next few months but when this is the case WMT will at least have halved in price, too. Amazon will hardly, if ever, be cheap on a comparative basis.

 

I think high growth post-2020, rather than GDP-level growth, would still be assumed in the 20x EBIT multiple assumption on 2020 numbers.  But I agree with your point about comparing to Walmart.  I don't think those comparisons are particularly helpful, and I don't use them.

 

I understand the view that the analysis is my previous post may be short-sighted because, as you say, Amazon may dominate for decades and such dominant growth is nearly impossible to overvalue if the assumed dominance comes to pass and your holding period is long enough.  But my response to that line of thinking is that there must be some price at which Amazon is overvalued today, even if it does dominate the future. 

 

If you did not have any position (so position size limits were not a constraint to opening a long position), what would Amazon have to trade at today for you to say it's too expensive for you to buy?

[ni-co]

If you did not have any position (so position size limits were not a constraint to opening a long position), what would Amazon have to trade at today for you to say it's too expensive for you to buy?

 

I only have half a position on because I hope to get it 30-50% cheaper within the next few months. At double the price from today I would have a hard time buying it because, of course, there remain a lot of risks for Amazon's growth (especially around AWS). On the other hand, as I said, at half the price from today I'd buy it hand over fist because it would be far too cheap. So, regarding the risk/reward balance I'd say it's fully priced at the moment—but not overvalued. I think the best way to think about it is as SOP with a sales multiple for the retailer under the assumption of continuing strong growth for years.

 

A lot of Amazon's value depends how they push and develop their strategy. When they introduced the Amazon Fire phone I thought that Bezos had lost his mind and become megalomaniac. I was right on the product/strategy but completely wrong on Bezos. I'm very impressed how fast he did a 180 and axed not only the phone but the whole platform strategy around Amazon Fire. Amazon's focus is now on logistics and this is something I much more agree with. It plays to their strengths.

[rpadebet]

If you did not have any position (so position size limits were not a constraint to opening a long position), what would Amazon have to trade at today for you to say it's too expensive for you to buy?

 

I only have half a position on because I hope to get it 30-50% cheaper within the next few months. At double the price from today I would have a hard time buying it because, of course, there remain a lot of risks for Amazon's growth (especially around AWS). On the other hand, as I said, at half the price from today I'd buy it hand over fist because it would be far too cheap. So, regarding the risk/reward balance I'd say it's fully priced at the moment—but not overvalued. I think the best way to think about it is as SOP with a sales multiple for the retailer under the assumption of continuing strong growth for years.

 

A lot of Amazon's value depends how they push and develop their strategy. When they introduced the Amazon Fire phone I thought that Bezos had lost his mind and become megalomaniac. I was right on the product/strategy but completely wrong on Bezos. I'm very impressed how fast he did a 180 and axed not only the phone but the whole platform strategy around Amazon Fire. Amazon's focus is now on logistics and this is something I much more agree with. It plays to their strengths.

 

Regarding logistics expansion, I have my doubts,

 

1) not sure AMZN is actually trying to make it their business. I initially thought it was kind of a supplementary effort around the grocery and same day shipping offering. It could also be " threat" to UPS and others to up their game, just like AMZN does with its retail suppliers.

 

2) Didn't WMT try their hand here a few years ago and then give up? If WMT failed then, why would AMZN succeed now? What is their edge? What do they plan to do differently?

 

3) Logistics is a very very low margin business until you have a big scale. Bezos says "your margin is my opportunity". If he is now going after a business with margins lower than even retail, is he running out of opportunities?

 

[ni-co]

Regarding logistics expansion, I have my doubts,

 

1) not sure AMZN is actually trying to make it their business. I initially thought it was kind of a supplementary effort around the grocery and same day shipping offering. It could also be " threat" to UPS and others to up their game, just like AMZN does with its retail suppliers.

 

2) Didn't WMT try their hand here a few years ago and then give up? If WMT failed then, why would AMZN succeed now? What is their edge? What do they plan to do differently?

 

3) Logistics is a very very low margin business until you have a big scale. Bezos says "your margin is my opportunity". If he is now going after a business with margins lower than even retail, is he running out of opportunities?

 

1) I think it's both. First and foremost, they do it to optimize their own offerings and cost structure. In this way, they can build up scale over the years. This is a classic disruption story playing out. I'd bet that, at first, they take the lowest margin part of the logistics out of the logistics companies' hands. Then they roll-up the market from the lower-margin towards higher-margin business while building out their infrastructure and shifting more and more of their own business away from the incumbents.

 

2) Amazon and WMT use completely different ways of distribution. I may be wrong on this but what I've gathered from reading The Everything Store is that Amazon's distribution is a technological problem. I don't think that WMT had or has the necessary technical resources, especially the right people, to tackle this. Even UPS's network has grown organically and not been built from the ground up with online retailing in mind. This is a problem made in heaven for a tech company.

 

3) Are they? UPS's profit margins are somewhere between WMT's and COST's. Who is paying for those margins? Someone like their largest customer maybe? What does Amazon stand to gain from entering their business? Most people are overlooking that this is a double-bang shot for Amazon: Not only do they gain an additional business (third party logistics), they simultaneously reduce their own costs by cutting out UPS's profit margin. Integration along your value chain is a classic disruption move and because Amazon is UPS's largest customer they can't do much about it. I concede that logistics is a very difficult market to enter for anybody but for Amazon with their growing scale it's becoming a no-brainer.

[KCLarkin]

Greene’s experience should help her solve Google’s biggest, most-surprising challenge: its technology is too advanced. The company’s powerful internal systems work in radically different ways, which can make selling it harder.

Google’s first attempt at the cloud, App Engine, let developers upload software code and Google would handle everything else. It was a futuristic vision, but people didn’t want to rent computers like that. Instead, customers flocked to Amazon’s less-advanced but more-flexible offerings. Google is now developing products that look a lot more like its rival’s. "You have to meet people where they are," said Holzle. "Otherwise they can’t get started."

"They are probably the most advanced cloud operation on the planet. It also doesn’t matter," said Carl Brooks, an analyst at The 451 Group.

Google needs more humdrum enterprise features like compatibility, compliance, and security, he said.

 

This should get interesting. If Google becomes more pragmatic, they could make this a real race with AWS.

 

Source:

http://www.bloomberg.com/news/articles/2016-03-22/google-s-greene-hastens-cloud-expansion-in-race-with-amazon

 

[ni-co]

Greene’s experience should help her solve Google’s biggest, most-surprising challenge: its technology is too advanced. The company’s powerful internal systems work in radically different ways, which can make selling it harder.

Google’s first attempt at the cloud, App Engine, let developers upload software code and Google would handle everything else. It was a futuristic vision, but people didn’t want to rent computers like that. Instead, customers flocked to Amazon’s less-advanced but more-flexible offerings. Google is now developing products that look a lot more like its rival’s. "You have to meet people where they are," said Holzle. "Otherwise they can’t get started."

"They are probably the most advanced cloud operation on the planet. It also doesn’t matter," said Carl Brooks, an analyst at The 451 Group.

Google needs more humdrum enterprise features like compatibility, compliance, and security, he said.

 

This should get interesting. If Google becomes more pragmatic, they could make this a real race with AWS.

 

Source:

http://www.bloomberg.com/news/articles/2016-03-22/google-s-greene-hastens-cloud-expansion-in-race-with-amazon

 

Yes, I agree. From Stone's The Everything Store:

 

Bezos wanted AWS to be a utility with discount rates, even if that meant losing money in the short term. Willem van Biljon, who worked with Chris Pinkham on EC2 and stayed for a few months after Pinkham quit in 2006, proposed pricing EC2 instances at fifteen cents an hour, a rate that he believed would allow the company to break even on the service. In an S Team meeting before EC2 launched, Bezos unilaterally revised that to ten cents. “You realize you could lose money on that for a long time,” van Biljon told him. “Great,” Bezos said.

 

Bezos believed his company had a natural advantage in its cost structure and ability to survive in the thin atmosphere of low-margin businesses. Companies like IBM, Microsoft, and Google, he suspected, would hesitate to get into such markets because it would depress their overall profit margins. Bill Miller, the chief investment officer at Legg Mason Capital Management and a major Amazon shareholder, asked Bezos at the time about the profitability prospects for AWS. Bezos predicted they would be good over the long term but said that he didn’t want to repeat “Steve Jobs’s mistake” of pricing the iPhone in a way that was so fantastically profitable that the smartphone market became a magnet for competition.

 

Ironically, that's just what happened.

[ni-co]

http://www.wsj.com/articles/googles-computing-service-lures-high-profile-clients-1458681118

 

My best guess is that Google is going to quit cloud services in a few years as it will turn out not to be profitable enough. They can't use it to sell more ads and it would be the first time that they keep losing money for a prolonged time in a business that doesn't add to their core. Might be me but I don't really see their strategic angle here.

[Liberty]

Might be me but I don't really see their strategic angle here.

 

Scale from the cloud business can be leveraged in their other businesses and vice versa, so there's definitely some strategic fit. Whether it'll be a good long-term business for them is another question, but if I had to bet, I'd probably bet that they'll stay in for the long term.

[fareastwarriors]

http://www.wsj.com/articles/googles-computing-service-lures-high-profile-clients-1458681118

 

My best guess is that Google is going to quit cloud services in a few years as it will turn out not to be profitable enough. They can't use it to sell more ads and it would be the first time that they keep losing money for a prolonged time in a business that doesn't add to their core. Might be me but I don't really see their strategic angle here.

 

 

Google's Greene Hastens Cloud Expansion to Catch Amazon

http://www.bloomberg.com/news/articles/2016-03-22/google-s-greene-hastens-cloud-expansion-in-race-with-amazon

[Liberty]

http://www.reuters.com/article/us-google-home-depot-cloud-idUSKCN0WO380

[Phaceliacapital]

I have been an avid fan of Amazon since the launch of its retail website. However, it was very difficult

to see when the company would become profitable when it went public in 1997. Sales increased rapidly

but losses followed suit. Slowly, the company has become slightly profitable. The company has a policy

of investing heavily in its future and is always willing to sacrifice short-term profits. Amazon spends

billions of dollars on a very important activity and a potential source of wealth: to dig a huge economic

moat around its business to keep far away competitors. This is the best way that a CEO can spend money

(when the moat is real and not imaginary as is so often the case). In our opinion, Jeff Bezos is one of

the greatest businessmen in history and we would have liked to become partners with him for many

years now.

Historically, Amazon has benefited from Wall Street’s support of its bold strategy focused on the long

term. In 2014, the stock had corrected from $400 to under $300. With EPS of little over $1, the stock

seemed very far from a bargain. I nonetheless took the time to look more closely into their business

model and tried to assess the earning power going forward to 2020. My estimates seemed plausible: I

arrived at an EPS potential of $28 in 2020. Using a P/E ratio of 25 times, this would justify a stock price

of $700 six years later (a potential annualized return of 15%). But hoping for a greater margin of safety,

I preferred to wait for a lower price. Today, a little over a year after my analysis, the stock is at $575,

or 92% more than the price at which I considered buying shares.

I realize fully that the company is difficult to value with its current level of profitability. The “value

investor” in me makes me reluctant to bet too much on the future. But I have often said that “being

disciplined is to follow your rules; but being wise is knowing when to break them.” Buying shares of

Amazon requires an act of faith in Jeff Bezos. With a good enough margin of safety, it might be wise

to invest with him

[ZenaidaMacroura]

I have been an avid fan of Amazon since the launch of its retail website. However, it was very difficult

to see when the company would become profitable when it went public in 1997. Sales increased rapidly

but losses followed suit. Slowly, the company has become slightly profitable. The company has a policy

of investing heavily in its future and is always willing to sacrifice short-term profits. Amazon spends

billions of dollars on a very important activity and a potential source of wealth: to dig a huge economic

moat around its business to keep far away competitors. This is the best way that a CEO can spend money

(when the moat is real and not imaginary as is so often the case). In our opinion, Jeff Bezos is one of

the greatest businessmen in history and we would have liked to become partners with him for many

years now.

Historically, Amazon has benefited from Wall Street’s support of its bold strategy focused on the long

term. In 2014, the stock had corrected from $400 to under $300. With EPS of little over $1, the stock

seemed very far from a bargain. I nonetheless took the time to look more closely into their business

model and tried to assess the earning power going forward to 2020. My estimates seemed plausible: I

arrived at an EPS potential of $28 in 2020. Using a P/E ratio of 25 times, this would justify a stock price

of $700 six years later (a potential annualized return of 15%). But hoping for a greater margin of safety,

I preferred to wait for a lower price. Today, a little over a year after my analysis, the stock is at $575,

or 92% more than the price at which I considered buying shares.

I realize fully that the company is difficult to value with its current level of profitability. The “value

investor” in me makes me reluctant to bet too much on the future. But I have often said that “being

disciplined is to follow your rules; but being wise is knowing when to break them.” Buying shares of

Amazon requires an act of faith in Jeff Bezos. With a good enough margin of safety, it might be wise

to invest with him

 

This is great, who is the quote by?