#DigitalSkeptic: Amazon Sells Idea That the Worse Company Does, the Better

NEW YORK (TheStreet) -- There are counterintuitive investing strategies, and then there is this: The worse some companies perform, the better some investors perform.

Take a long hard look at Amazon's 2013 Security Exchange Commission Annual Statement. These easily downloadable, once-a-year, so-called Form 10-Ks offer what investors desperately need in today's nanosecond-long investor news cycles: a stately, year-by-year analysis of what a firm such as Amazon really does, what it really makes and what its real prospects are.

After a few weeks of breaking down Jeff Bezos & Co.'s annual filings, wouldn't you know it if the strangest-of-strange investing strategies emerged. That is, if investors really want to crush it in 2014, what they are looking for is not companies that perform brilliantly ...

But ones that perform poorly.

Amazon dries up
The twisted logic of the Digital Age is apparent right from the top of Amazon's annual statements. For starters, the Seattle, Wash., online retailer appeared to have a boffo 2013. Revenues grew to $74 billion from $61 billion the year before. More importantly, Bezos finally put some money in the bank.

Net earnings jumped to a $274 million gain from a $39 million loss in 2012.

This roughly eight-times profit spurt seemed to indicate that Amazon was finally flowing with real Web gold -- that is, until investors compared these 2013 figures to 2011's. Yes, sales did grow by 54% over those two years. But look closely at the annual income statements for each year and what you will see is that operating income -- you know, what it costs to actually, eh, operate -- fell(!) by roughly 14% during those 24 months.

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