Why Amazon (NASDAQ: AMZN) is Overvalued

I was just taking a look at AMZN valuations ratios. And I was pretty floored at how over valued a “safe stock” was. The Shiller PE ratio is 403 good lord! So for some perspective on that, at the height of the dot com bubble the average Shiller PE was 45! yeah Amazon is 10x more overvalued than dot com companies were in one of the hugest bubbles ever by the stock price compared to earnings. And what did people say in the dot come bubble “Oh don’t worry these companies will expand and make more money to ultimately justify the price! there’s no concern!”.

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And what does every single person say about Amazon right now: “Oh don’t worry they’ll expand and make more money to ultimately justify the price! there’s no concern!”

Don’t get me wrong they are a pretty compelling company, But you are paying a ton of money to barely get any profit.

It’s basically going to be impossible to ever get any kind of dividend yield out of it. You’re only there for price appreciation. But maybe one day every one else who was only there for price appreciation will decide they want buy companies that actually give them profit and dividends for their money. Then you’ll only have price deprecation.

These aren’t the safe stocks. You are skating on thin ice. Being safe from bankruptcy isn’t the same as being safe from investment losses.

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