Tuesday, April 4, 2017

Ways To Go About Shorting AMZN

AMZN is a difficult stock, as it has a cult like following (Cramer, I guess invented this phrase). So every time AMZN get beaten down, it rises up like a phoenix from its own ashes. 

Been there done that. 

So, here is my advice to anyone who wants to short this name. 

In general, you have 2 choices in going about shorting.

First, you MUST find a fundamental flaw in the thesis of AMZN business model, This might some costs that are rising, or some markets that are gonna be in decline or any other sort of fundamental feature of the overall AMZN story that is overlooked by the markets, You might say its impossible as markets are efficient. But you will be wring. 

Second, wait or a catalyst event, be it news or some other thing that will negatively affect AMZN's performance. Maybe some major acquisition (think NFLX), or something like that. So in general, you gotta have one of these two like hard, ideally both of the at the same time. Otherwise, AMZN is one of the hardest names to bet against.

Shorting is much harder strategy just going long, as by shorting you are going against the normal course of the markets direction, which is higher by the time passes.

One has to think deep and long before embarking into this journey which is full of pitfalls.

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