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A comment on Why Amazon Has No Profits and Why It Works. Parent comment

Re:Why Amazon Has No Profits and Why It Works by pdq on Friday September 05, 2014 @02:43PM (#8275569)
There has been a distortion in the markets lately with the value of cash. Over the long term, buying a share of any company (Amazon, Intel, Walmart) has to give a return to the holder of that share. Otherwise, you are trading cash to hold onto a piece of paper and get it returned back as cash when you sell it.

This invalidates the time value of money. In other words, if I am not getting a quarterly/annual dividend (ie a profit payout) on a stock, over the long term there is no incentive to hold onto that stock, because I could get a dividend from a different stock or some other investment in general.

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Re:Why Amazon Has No Profits and Why It Works by jmccree on Friday September 05, 2014 @03:14PM (#8275746)
If the company can increase the value of your share by spending the money rather than giving it back as a dividend, why would they not? Buffet's Berkshire Hathaway is famous for never having given a dividend. Amazon is still seeing good revenue growth year after year, I see no reason not to continue down that path as long as they can afford the growth.
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Re:Why Amazon Has No Profits and Why It Works by thaumasiotes on Friday September 05, 2014 @06:05PM (#8276562)
By this argument, a bar of gold invalidates the time value of money. So does the existence of artwork.
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Re:Why Amazon Has No Profits and Why It Works by eru on Sunday September 07, 2014 @03:18AM (#8280513)
Artwork pays a convenience yield. You can look at it.

But I definitely agree with the gold example.

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Re:Why Amazon Has No Profits and Why It Works by vasilipupkin on Friday September 05, 2014 @02:49PM (#8275596)
well, you are betting that you will get a dividend at a much later point in the future because of the growth you think you will realize. if Amazon makes $100 it can either give it to you now, or reinvest it and give you the reinvested result much later. It makes sense to give you the $100 now, if they don't see any good investment opportunities. But they think they do, and market agrees with them, hence massive growth in stock price over the last 3-5 years.
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Re:Why Amazon Has No Profits and Why It Works by ericd on Friday September 05, 2014 @03:52PM (#8275942)
It's also a unit of control, which has increasing value as the value of the company increases.
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