Why I’ll Never Sell My Amazon Stock
The list of stocks that I can say I’ll never sell is very short. In fact, Amazon.com (NASDAQ: AMZN) may be the only one.
Virtually every company tries to expand. If or when those growth prospects dim and revenue begins to stagnate, they tend to focus on maximizing current earnings and returning cash to shareholders through dividends and/or share repurchases. That’s usually the rational decision when there are limited opportunities to use cash to reinvest in their own businesses.
When a company comes along that reinvests virtually all of its resources, year after year, into growth at the expense of current earnings, it’s a whole different ballgame. Amazon founder and CEO Jeff Bezos wrote in his 1997 letter to shareholders, “When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.”