Friday, January 30, 2009

The Amazon and the Outback

Amazon rose so much in share price, to over 40x earnings at the moment.  How much are they going to grow?  People are willing to pay $25 billion dollars to get access to a revenue stream in the $600 million range with very thin profit margins (~3%).  Typical market overreaction, amplified by the fact that there is very little other good news to invest in.

On the other hand, Australia is considering a drop in interest rates, so I am taking a hit on the Australian dollar. I still think it's a good longer term currency play, even though I am losing in the short run.  Where are those Australian dollars going? The yen is still off of its high against the US dollar.

Gold keeps trawling upward as the stimulus grows and Russia and China are making a lot of noise at Davos about the insufficiency of the US dollar to serve as the world's reserve currency due to irresponsible spending and lending.  It's going to be amazing if they can avoid a serious drop in the US dollar.  I don't know if owning gold really makes logical sense, but I still feel like it's worth holding onto just because the possibility of a quick gain is worth the risk of the modest drop it might take.

No comments: