Fallen: 5% Consider buying after: 25%?
If you can accept that we are a bit overdue for a correction, then consider the two factors that indicate, more than all others, which stocks will be punished the most severely when the correction comes. First, which stocks have risen the most in the last six to 18 months? In the case of AMZN, that’s a huge 25% to 55%. Second, consider which stocks are unsupported by present earnings (bull markets love potential future earnings; bear markets hate them). In this case, AMZN has the pathetic trailing P/E of 181. If you are kicking yourself for not buying AMZN at $700, don’t kick too hard — just wait.
Chart courtesy of www.stockcharts.com