Trends and other statistical findings are fantastic. Until you find one of the many situations where they don't apply.
When you're dealing with a relatively small present-day sample -- the dozen or three dozen stocks or so we like to use as comparison cases -- you have to go on a case-by-case basis. Your ability to make a more qualitative analysis -- one that works in some quantitative data -- ultimately dictates your ability to determine which stocks will continue to fly high and which ones will ultimately fall.
Dig into the business, not a broad application of history.
If Amazon, as Heller indicates, is accomplishing things no other company has accomplished before and there's no end in sight, why shouldn't it have what we tend to call, when we're thinking old-school, a sky-high valuation. If you can find true holes in the business -- something beyond the standard it's just overvalued and that must correct argument -- you might have something. That's the approach I take when I'm bullish NFLX the stock, but bearish Netflix the company.Ultimately, we're short-changing the metric of investor confidence when we have these discussions. Jeff Bezos is alive. Steve Jobs is dead. Simple as that. AAPL doesn't become a $700 stock again until Tim Cook wins over the confidence of the stock market. He likely will not do this, in any wholly meaningful fashion, until he kills, creates or reinvents a new category. AMZN doesn't crash, barring some unforeseen hitch with the business, until Jeff Bezos dies, gets sick or finds a reason to step down from an unfinished job. Knock on wood on last sentence. That's the reality. I have yet to see a truly well-thought out bear case on AMZN. They all toss out the same quantitative pitch followed by age-old valuations tend to work themselves out line. Try using that one next time you're in a bar. All I know is that, as AMZN continues to rise -- and you know it's headed to $400 -- the beer will flow. TheStreet's tech editor Chris Ciaccia and TheStreet contributor Robert Weinstein already owe me cold beer at a reasonable price. I'd be more than happy to add Jonathan Heller to the list. Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV