Understanding Amazon...A Spin Off

First, a housekeeping note. I've been experimenting with the mysterious world of twitter. I'll confess it baffles me, but it also intrigues. If you're interested in my occasional twitter musings, feel free to connect with me at this handle: @pauldryden. 

I've also put a box of tweet updates on the blog. 

This is a brave new world for me, folks. Be patient!

Now, as many of you have noticed, my interest in the business of Amazon.com has turned into an obsession. But it's a healthy one. I think. 

I don't want that to suck all the oxygen out of my other ideas and research exercises here on Adjacent Progression. Amazon-related posts now account for about a quarter of the content of this blog, and - for better or worse - there's a lot more coming. 

So it's time for a spin off. New musings about Amazon will appear at this site, www.understandingamazon.com. I've also put a link to it at the top right hand corner of the side navigation bar. 

My goal is to continue posting at Adjacent Progression two or three times a week on average. There remains plenty of material to wrap my brain around. And while the cardinal purpose of the blog continues to be about helping me develop my own thoughts (especially around investments), I hope the readers who have stumbled upon it will still find it useful, entertaining, frustrating, confounding...whatever those reasons are that keep you reading.

Why all the thinking about Amazon? In brief, it's a remarkable business (which I mean less in the adoring fan sense and more from the perspective of a - somewhat - neutral researcher willing to be impressed by the performance of his specimen). It's poised to do some transformational things in its various spheres of influence. I see it taking those models refined in its web retailing ventures, and applying them to a long string of new initiatives. And I think its likelihood of success in the new businesses is unusually high. I'll explore those concepts more on the new blog.

From an investment perspective, I remain on the sidelines. The price is not right. Though I suspect it will be in the not so distant future. What is the right price? I have no idea the amount. The opportunity to buy will come less from a precise price and more from Mr. Market's attitude about the company. Today he is optimistic and excited. But because Amazon is investing so heavily in its growth opportunities - to a point where it could very well post a loss at some point in the next few quarters - and because those growth opportunities are hard to understand, I anticipate the current attitude will give way to overreaction on the downside. The sort of pessimism that, when attached to an outstanding business, gets my heart pumping.

I'll revert back to this Warren Buffett quote previously posted under No Extra Credit for Being a Contrarian:

The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.

I hold out great hope for calamity. My optimism in the market's eventual pessimism knows no bounds! And in the meantime I wait.

I hope you'll continue indulging my obsession by following the series at Understanding Amazon.