I’m long Amazon – Here’s a few key reasons why

I’m long Amazon now that markets are open!

Amazon has not wicked below the lower BB20 (on the monthly) since the 2008 GFC, indicating it is two standard deviations oversold and prices are low on a relative basis. Bollinger bands are not intended to be used on their own, so on to point 2.

Figure 1

Similarly, it has not wicked below the MA50 and EMA50 since 2008.

Figure 2

Figure 3

As an exponential growth stock, it has traded above EMA20 for the majority of months in the last 14 years. It will do so again.

Figure 4

Looking at some of the worst selloffs over the last 14 years, the GFC stands out @~-65% from peak to trough. Do I think the price will reach ~$1,308? No. Am I worried if it does? No.

Figure 5

Has their business model changed? No. It’s a long term investment, and long term there hasn’t been a better time to buy in years!

@aswathdamodaran, the father of valuation recently indicated that $AMZN was ~9.7% undervalued at $3068 (valuation @ $3,398). Current price is $2,226 indicating ~-34% undervalued.

Figure 6

He also added it to his portfolio. He tweeted on Feb 13 (not sure of the purchase date or if still holding).

Assuming he purchased on 24th Jan when prices were at their lowest, means I enter my trade 16% lower

Figure 7

This is not a metric, but another indicator in my arsenal to support my thesis – someone I look up to tremendously has the same idea.

@RaoulGMI recently started the macro masterclass series on @RealVision– I recommend everyone watch it if you want to understand the current macro climate from some of the greatest minds of our time.

There he also points out that $AMZN is two standard deviations oversold and that you should be a buyer. I tend to agree. The upside we’ve been given from sellers is a gift and I thank the paper hands for it.

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