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You're Nuts If You See Amazon's P/E as a Buy Signal

I don't share Pendola's opinion that measuring P/E's are now no longer relevant. Sorry, but I heard this all before many times. In the 1980s, it was Japan, and they were going to take over the world. I saw this first hand as I lived in Japan during the height of their bubble.

In the 1990s, it was anything dot com, and I am relatively sure anyone reading this remembers hearing "you can't lose money in housing; they're not making any more land... yada yada yada". Now we have social media's Facebook (FB - Get Report) and federal debt that is the new bubble.

Cue: "The Song Remains The Same" -- Led Zeppelin

Amazon may continue higher; no one knows, and if they do, they are not telling. Just because a stock may increase in price, doesn't mean the risk is worth the reward. Keep that in mind when considering Amazon.

It's OK to shop at Amazon (my family does), but if you want online commerce in your portfolio, look towards Apple (AAPL - Get Report), Google (GOOG), Yahoo (YHOO - Get Report) and Ebay (EBAY).

These online companies have the same potential as Amazon, without the super-sized price tag. In fact, they all compete effectively with Amazon with lower downside risk and growth potential.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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