Amazon could send this Aussie small-cap soaring 750%

Monday, 6 November 2017
Melbourne, Australia
By Bernd Struben

  • Why Amazon needs local Aussie expertise
  • Amazon’s dirty little secret
  • Petrol sees fastest price rise in 13 years

If you signed up for veteran trader Jason McIntosh’s six–part video training series ‘Trade Secrets’, you should have received your fourth installation this morning.

Be sure to check your inbox. And set aside a bit of uninterrupted time to watch it.

Financial losses in life tend to impact us far more than the gains. When you’re trading stocks, this can stop you in your tracks. And see you miss out on potentially lucrative trades.

Today, Jason reveals his four-step, pre-trade checklist to beat back fear and get on with business. It’s a process he’s used himself to great success in his own trading career.

Taking fear out of the picture can give you a huge advantage over other traders. Removing greed and other biases will help cement your lead.

As Bloomberg reports:

On Oct. 9, the Nobel prize in economics went to a University of Chicago behavioral economist, Richard Thaler, for exploring the biases and cognitive shortcuts that affect how people absorb and process information.’

When it comes to the markets, a number of funds try to capitalise on investors’ behavioural biases.

Bloomberg continues:

The Fuller & Thaler fund, for example, focuses on investors’ overreactions and underreactions to events. “In general, people overreact to vivid, emotional stories and underreact to dull information or when they have prior strong expectations,” says lead portfolio manager Raife Giovinazzo. “There’s nothing quite so vivid and emotional as losing money, so when a stock goes down, people overreact.”…

The Fuller & Thaler fund, for example, focuses on investors’ overreactions and underreactions to events. “In general, people overreact to vivid, emotional stories and underreact to dull information or when they have prior strong expectations,” says lead portfolio manager Raife Giovinazzo. “There’s nothing quite so vivid and emotional as losing money, so when a stock goes down, people overreact.”

Overreacting and underreacting in the stock market is a recipe for poor outcomes. That’s why Jason McIntosh went to great lengths to take human emotion out of his premium trading service, Quant Trader.

If you signed up for Jason’s training series, be sure to check your inbox again tomorrow. That’s when Jason explains how you can find winning trade ideas before they become mainstream news.

And now a look at the markets.

Markets

Over the weekend, the Dow Jones Industrial Average closed up 22.93 points, or 0.10%.

The S&P 500 gained 7.99 points, or 0.31%.

In Europe, the Euro Stoxx 50 index finished up 1.16 points, or 0.03%. Meanwhile, the FTSE 100 gained 0.07% and Germany’s DAX gained 37.93 points, or 0.28%.

In Asian markets, Japan’s Nikkei 225 index is down 88.41 points, or 0.39%. And China’s CSI 300 is down 0.04%.

In Australia, the S&P/ASX 200 is down 8.77 points, or 0.15%.

On the commodities markets, West Texas Intermediate crude oil is US$55.84 per barrel. Brent crude is US$62.30 per barrel.

Gold is trading for US$1,267.59 (AU$1,658.50) per troy ounce. Silver is US$16.84 (AU$22.03) per troy ounce.

One bitcoin is worth US$7,344.45.

The Aussie dollar is worth 76.43 US cents.

Why Amazon needs local Aussie expertise

When was the last time you unloaded US$1.1 billion (AU$1.4 billion) worth of stock?

What, never?

OK. Me neither. Though it’s a pleasant fantasy to entertain!

I ask because that’s exactly how Jeff Bezos, founder and CEO of Amazon.com, Inc. [NASDAQ:AMZN], kicked off November.

From Fortune:

Amazon founder and CEO Jeff Bezos sold 1 million shares in his company, whose stock is at an all-time high.

According to a Friday SEC filing, Bezos sold the shares starting on Nov. 1 at an average price of just under $1,100 each.

The sales began shortly after a strong earnings report pushed Amazon’s stock up by more than 8%. Bezos’s net worth surged above $90 billion, once again making him the richest person in the world as of Oct. 27. Over the past year, Bezos has jockeyed for the top spot with Microsoft founder Bill Gates.’

When CEOs sell off a large chunk of shares, it can be a sign they know something the rest of don’t. But that’s unlikely to be the case here. It’s not the first time Bezos has sold off a large portion of his Amazon holdings. And he still owns about 16% of the company.

More than likely he was motivated by the 8% share price surge, which currently sees the company valued at US$535.65 billion. And perhaps he eyed the company’s price to earnings (PE) ratio of 280.58 and got a little nervous.

When you see nosebleed PE ratios like that, you know the market is pricing in massive growth ahead. And whether or not shares priced at 280 times earnings are justified, Amazon looks set to continue delivering massive growth.

You’ve heard of course, that Amazon is coming Down Under. In fact, the company has already installed its first official shipping centre in Melbourne. At 24,000 square metres, it’s a small one by their standards.

Now, after months of media hype, the retail juggernaut is set to launch its Australian business before the end of November.

As The Sydney Morning Herald notes:

Online shopping giant Amazon is tipped to officially start its Australian business by the end of November to coincide with the Black Friday and Cyber Monday shopping frenzy, when retailers drastically reduce prices.

Already some brands have started discounting to whet the appetite of what are said to be the biggest “shopping events” of the year. They start Friday, November 24 and end Monday, November 27.’

Competing retailers are worried. Shoppers are excited. And with retail prices likely to come down, the RBA’s 2–3% inflation target looks further out of reach than ever.

Not to mention that Black Friday marks the day after Thanksgiving. Which begs the question, how long before the iconic US ‘Turkey Day’ joins Halloween on the Australian calendar? (Sorry…couldn’t resist.)

Now Amazon has had an eye on the Aussie market for a long time. And it’s laid some good groundwork to launch its online shopping services.

But Sam Volkering, editor of Australian Small-Cap Investigator has uncovered a glaring hole in their plans.

Sam calls it Amazon’s ‘dirty little secret’. This secret could cost Amazon’s Australian operations dearly. And see investors in a certain Aussie small-cap reap gains of over 750% in short order.

Amazon’s dirty little secret

Sam has little doubt Amazon Australia will succeed…eventually. But he sees them stumbling out of the gate. And in desperate need of some local assistance.

Not because Amazon can’t figure out how to sell to Australians. Aussie’s are already buying almost $700 million worth of goods from the company’s overseas websites, each year.

But Amazon has greatly underestimated the logistical differences between operating in Australia and a similarly sized geographical market, like the US. Even as they get set to officially open for business here later this month, they’re unprepared for the reality they’ll face on the ground.

Yet despite the billions of dollars at stake, most market analysts are completely blind to this problem. And the mainstream has wholly ignored one particular Aussie small-cap that offers a ready solution. In fact, nobody I know of, aside from Sam, is publicly talking about it at all.

This small company offers a quirky local solution for Amazon to address our uniquely local problem.

But when you see it in action, you’ll understand why, once it’s proven in the field here, it could be set to dominate the entire world.

At time of writing, shares in this company are trading at 65 cents, up 3.52% today. But if Sam’s right, they won’t stay at that price for long. Here’s what he writes:

This company has one more big announcement scheduled for 16 November.

Each announcement like this has led to a major uptick in the stock price. I expect another surge now.

That’s why I’ve pulled together everything I’ve uncovered about this company, and put it in a special fast-action report for you.’

We’ve only just published Sam’s special report today. Get all the details here.

Petrol sees fastest price rise in 13 years

If you’ve filled up your car recently, you’ll have noticed petrol prices are getting dearer. According to Comm-Sec, last week’s 8% spike was the largest weekly gain in 13 years.

But this time it’s not just your local servo jacking prices in anticipation of the holidays. The rise is largely based on increasing oil prices.

From The Sydney Morning Herald:

A global oil price surge is set to drive up the cost of petrol through the Christmas holiday season and experts are warning the pain at the bowser is likely to intensify in the New Year.

The Organisation of the Petroleum Exporting Countries cartel has slashed production levels over the past year, at the same time as American and Russian producers pulled back, raising prices strongly in recent months.

The Brent Crude benchmark climbed to a two-year high on Sunday reaching $US62.07 ($81.10)…

Oil has been on an upwards trajectory since both America and the OPEC agreed to cut production levels to “rebalance the market” in December 2016.

Earlier this year, 24 oil-producing countries began to cut output levels by 1.8 million barrels of oil equivalent a day, over an initial six month period, but quickly agreed to extend the deal to March 2018 in order to reduce oversupply and lower existing crude oil inventories.

OPEC nations soon ran above compliance levels for the agreement, hitting 120 per cent of its reduction target in September. They further reduced output from September to October by an additional 180,000 barrels a day, marking an overall production rate of 32.59 million barrels per day.

Now, this agreement may again be extended, beyond 2018, as OPEC nations meet once more ahead of the release of OPEC’s World Oil Outlook on Tuesday.’

None of this will come as a surprise to subscribers of Greg Canavan’s Crisis & Opportunity.

Back in August, Greg told his readers to expect oil prices to rise in 2017 and keep going up heading into 2018. It all has to do with what Greg calls, ‘the Aramco fix’.

Saudi Aramco is Saudi Arabia’s state-owned oil company. And as you may know, the Saudis are planning to sell off 5% of the company, in what would be the world’s largest IPO. They hope to get US$100 million for that 5% slice, which would value the entire company at a staggering US$2 trillion.

But to get that much for the company, the Saudis know investors will need confidence in oil prices. The kind of confidence they’ll get when they hear things like, ‘OPEC nations soon ran above compliance levels for the agreement, hitting 120 per cent of its reduction target in September.

It’s not often OPEC members meet their compliance agreements. Let alone exceed them.

It’s sound like ‘the Aramco fix’ is in.

And that should be good news for the three Aussie energy stocks Greg tipped to make the most of it. You can find all his analysis here.

Cheers,
Bernd