This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

You're Probably Better Off Buying Amazon Stock Than Apple

By: Rocco Pendola | 07/29/14 - 08:15 AM EDT

Stocks in this article: AAPLAMZN

NEW YORK (TheStreet) -- As my recent work makes clear, I'm an unabashed Apple (AAPL) fan. By and large, I think there's nothing but good in Apple's future under Tim Cook. However, I'm also a realist. I do my best to be as objective as my biases and filters will allow, which leads to the seemingly absurd statement that Amazon.com (AMZN) is, by a slight margin, a better investment than Apple.

Absurd, yes, on the surface, but not upon further inspection. So please hear me out ...

After Amazon's most recent post-earnings nosedive, TheStreet contributor Dana Blankenhorn just about said it all when he logically suggested investors "load up" on AMZN stock.

In his article, Dana cited an article I wrote in April after AMZN plummeted on earnings concerns. I could take the easy route and republish Making Sense of the Crash in Amazon Stock because everything I said in that piece holds true three months later.

As the record continues to show, immediate reaction to Amazon earnings is nothing short of hysterical. Consider part of Blankenhorn's case:

When Rocco wrote that story (in April), by the way, (AMZN) stock was trading at $296. After its latest "crash" it was at $317. That's down from $358 at Thursday's close, so traders who picked up shares last time they were rocked and sold right before earnings are sitting pretty right now.

Agreed. But, after we note, for the record, that AMZN closed Monday's session at $320.41, let's set the stock price aside. We tend to focus too much on day-to-day, week-to-week and even quarter-to-quarter movement.

It has become passe having the same debate every time Amazon does this. First, I want to reiterate something I said in April because I think it's important, not only with respect to AMZN itself and AMZN being a (slightly) better investment than AAPL but investing in general:

If you're long AMZN, let's hope you didn't do it simply to ride the momentum. If you did, sorry, but you sort of deserve any pain you're feeling right now. Momentum investing is not a long-term strategy. It should not comprise any segment of your portfolio other than that percentage you set aside for speculative bets. The size of that speculative allocation depends on the way you stomach risk and your overall financial condition.
The right way to be long AMZN is to have understood the story before the intense momentum kicked in. To have decided that it's the long-term, leave-it-to-your-grandkids stock of our generation. But to do that you had to a.) do your homework months and years ago and, subsequently, b.) buy into what Amazon CEO Jeff Bezos has been selling since the late 1990s! ...
If you don't understand this line of thinking, shut up. Quietly short AMZN stock. If you time it right, you might make money. But don't confuse what you're doing with standing up for the purity of investing. Because if you hate Amazon the company and/or AMZN the stock, you don't understand investing. You're playing the momentum game, which makes you part of the problem.

  1 2

Rocco Pendola writes for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.

Markets

DOW 17,195.42 +221.11 1.30%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,566.1380 +16.9120 0.37%

Rocco's Tweets

Brokerage Partners

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
Real Money Pro

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Trifecta Stocks

Trifecta Stocks analyzes over 4,000 equities weekly to find the elite 1% of stocks that pass rigorous quantitative, fundamental and technical tests.

Product Features:
  • Model portfolio
  • Trade alerts
  • Recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
Stocks Under $10

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Dividend Stock Advisor

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Breakout Stocks

Bryan Ashenberg, using sophisticated stock screening and fundamental research, identifies potentially explosive small and mid-cap stocks.

Product Features:
  • Model portfolio
  • Small-cap and mid-cap focus
  • Intraday trade alerts
  • Weekly roundups
Options Profits

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
Top Rated Stocks Top Rated Funds Top Rated ETFs