I think about investing money in stocks frequently. I’m young and can afford to take more of a risk now than I ever will be able to in the future. With that said, I still think the guiding principle for all investing should be “buy for the long-run.” That is, buy stock that you think will increase over the long-run, not something that will spike in a month, offer a small return, and leave you pressured to sell.
After reading Fred Wilson’s post on A VC about why he just bought Amazon stock and recently purchased Google stock, too, I thought back to Warren Buffet’s age-old approach of buying stock in companies that supply a good that consumers consume regularly. E.g., Coca Cola, razor blades, etc.
One of Fred’s reasons for buying Amazon stock is that, despite their large PE ratio, Amazon is the first place his family shops for anything – even before going to a local store.
So, is there a principle to be extracted from this approach to buying dot.com stock? Should we be looking for the Dot.coms that are irresistible replacements for everyday errands? That seems to make a lot of sense.
Afterthought – With increased demand to have things delivered, won’t there be an increased demand on delivery companies like FedEx, DHS, UPS, and the USPS? I would imagine they’re thrilled that people are buying more online than local stores.