Likelihood of Success

Ron Coleman’s pretty good blog

What would we do without experts?

Posted by Ron Coleman on July 31, 2007

Instapundit links to this quote in USA Today:

Investors saw the launch of Amazon Prime as the latest manifestation of Bezos’ fixation on free shipping, a profit drainer. They hammered Amazon (AMZN) shares down to $30 two years ago after the Seattle company began offering the unlimited free two-day shipping service for a $79 yearly fee.”Wall Street hates it when we lower prices, give away free shipping, and offer Amazon Prime,” Bezos said in an e-mail interview. “But we know in our bones that siding with the customer pays off for everyone in the end.”

Now, Prime is starting to look like a linchpin to Amazon’s remarkable run of increases in quarterly sales — and investors no longer appear kerfuffled. After the online retailing giant last week reported a singularly sharp rise in sales for its second quarter, its shares shot up 25%, topping $86 — a seven-year high.

What does this say about the wisdom of “Wall Street”? Is Jeff Bezos such a visionary that he “sees” truths such as these that armies of investment house analysts — “Wall Street” — miss?

If so, well, I understand why Jeff Bezos makes a lot more than I do. But I don’t understand why Wall Street does.

UPDATE:  A lot of lessons can still be learned in The Market, it seems.


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