Amazon Stock: One Day Later After The ‘Big Gain’ (NASDAQ:AMZN)

Investment Thesis

Rule 1: Equity investing is about making more capital gains than taking losses.

Rule 2: Doing that requires good forecasts, so find good forecasters. Like Market-Makers.

Rule 3: Test all forecasts for how well they may help you reach your goals.

Rule 4: Compare available current forecasts on all available-choice alternatives before deciding to act.

How the Amazon.com, Inc. (AMZN) Prospect Looks Now

Figure 1

This is the same format picture as presented in the previous article, but updated for the day’s trade implications as the far-right vertical price-range forecast and the day’s close price. For comparison, Figure 2 provides Friday’s MM forecast price range and history of prior standard portfolio management discipline outcomes.

Figure 2

While the current-day forecast rose to an upside of +35% from the day’s close of $3152, the downside also expanded by its limit rising less than the market price, widening the forecast range from 32% to 55%. The reward-to-risk ratio rises from 2.3 to 1 to 5.9 to 1 in the process.

That may sound all very advantageous, but the evidence of now a much larger sample of prior experiences operating under the changed circumstances produced a net gain average of only 3.8% per trade, compared to 5.3% under the Wednesday’s expectations. Between the two days the odds of having a profitable transaction fell from 6 out of every 8, a 75 out of 100 odds, to a 2 out of 3 propositions, or 67 out of 100.

The more complete measure of the changing proposition is that the CAGR annual rate of return in the earlier situation was +24% a year, and now it is expected to be +18%.

From an opportunity-competition point of view, when we look to see AMZN’s ranking in the list of best CAGR producing prospect equities there are over 250 more-able CAGR prospect investments than AMZN when similar evaluations are made to their situations and forecast expectations. Of the top 20 of those 16 propose triple-digit CAGRs.

Conclusion

We may have missed a neat opportunity to pounce on a one-day +15% gain, but were distracted by many more enticing prospects based on equivalent-source information. The attraction of present-day Amazon seems out-competed by many readily available alternatives. Tomorrow is another day to invest in pursuit of good opportunity to build financial wealth. Please stay in touch via Seeking Alpha.