AMZN: The Cult of Not Yet

If you’re anything like me, your past 36 hours have gone something like mine:

First, my blood pressure rose during after-hours trading Tuesday as Amazon (NASDAQ:AMZN) stock climbed against conventional logic. Then, I soaked in media coverage explaining it, marveling at it, laughing at it and decrying it.

Tweets like this summed it up for me:

Funny thing is, I’m incredulous, and I know I have absolutely no right to be. None of us do. After all…

This is the status quo for Amazon. AMZN stock has — as I’ve ranted to my wife many a time, receiving worrisome looks in return — run up on “rainbows and unicorns” for years. I pointed out in a recent article that, looked at annually, there’s been an almost inverse correlation between AMZN’s earnings and share price in the past couple years. We all should’ve known this was coming.

This is the status quo for Wall Street. You’ve been spoon-fed the lines your whole investing life, folks. “Past results are no guarantee of future returns.” “The market is forward-looking.” Amazon is being ginned up because people are looking forward and seeing potential. Apple (NASDAQ:AAPL) is being punished because people are looking forward and seeing potential weakness; Fair or not (it’s not), that’s how the game works.*

This is the status quo for the financial world. Just a few years ago, mortgage lenders, in their infinite greed, were increasingly willing to accept little to no proof of the ability to repay because they stood to make more money. Those chickens (known as subprime loans) came home to roost, sending financial companies across the globe into tailspins and tanking stock markets here and abroad. Call that summation gross oversimplification if you want, but that’s the thrust of it.

This is the status quo for other aspects of life. This miffs me the most. I’ll look to sports here, because I used to work in sports, and that’s what I know.

Sports media outlets spend months pimping out the NFL draft — an event we air over multiple days. We televise the NFL Scouting Combine — the league’s equivalent of drying paint — to see who can run the 40 in 4.3 seconds. We let Mel Kiper Jr. get away with this hair. At the end of the 2013 NFL draft, analysts will dedicate a few minutes talking about who might be at the top of the 2014 NFL draft! And we spend far more time obsessing over the NFL draft than we do talking about available free agents … you know, those guys who’ve actually taken a few snaps in the pros. (And by the by, I’m also guilty of this.)

This trickles down, too. Many people across this country obsess over how many “stars” are assigned to some high schooler in Mansfield, Ohio, and the subsequent college that kid is headed to. Never mind how many five-star players turn out as busts or how many two- or three-star recruits become difference-makers.

And why? Because too often, we put hype and potential ahead of substance and results.

I’m not naïve. Trying to predict the future is important. It’s called planning, and we as a species would be sunk without it. But if you don’t ground those plans with reasonable evidence that they could pan out, you slip from planning to daydreaming.

Many of those pundits clamoring on about AMZN see the same thing: hordes of shareholders planning for (or, one might say, daydreaming about) some mystical future in which Amazon’s results actually warrant the hype.

But gee, can you blame them?

Just imagine how much money they’ll make then.

*This is the part where you go, “You’re just bitter. You’re an Apple fanboy. You’re an AMZN short.” No. I’m bearish on Amazon, but only in the same ludicrously long-term time frame that AMZN bulls delve in. I am not short AMZN. I am not long AAPL. I have no sour stock grapes on this one. I’m just a mystified spectator.

Kyle Woodley is the Deputy Managing Editor of As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @IPKyleWoodley.

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