Seriously, Just Trust Your Instincts
A while back, I wrote confidently to short Netflix (NFLX). Simply put, “short selling” is betting that a stock’s price will decline.
For those without financial background, let’s say you borrow a jacket from a friend and sell it for 100$. Your buddy will ask for his jacket back, but you won’t have it. Instead, you go to a store and find the same jacket on sale for only 70$. You buy the jacket and return it to your friend while also pocketing the difference of 30$. Simple, no?
Netflix reported a loss of 800,000 subscribers, dropping from 24.59 to 23.79 million, but also reported record earnings. The outlook of netflix appears grim though they still kept over 95% of their customer base. Disproportionately, the stock dropped from 300 to 85 in 4 months.
If I had the balls to do what I so adamantly insisted was correct, short NFLX when it peaked at 300$, then I would be able to pocket a difference of over 200$ per share.
My guess now is that with Netflix losing much of its content, subscribers will flock to Amazon (AMZN) for their streaming needs. Amazon has recently added an impressive repertoire of content to their Amazon Prime (which is also cheaper than Netflix) which I’m sure will only expand to coincide with the new Kindle Fire release.
Number Seventeen: Trust your instincts.
I failed. Trust doesn’t only involve relationships with other people, it’s also extremely important for any sort of success. Your instincts won’t always lead you in the right direction, but there was a reason you believed them to be right in the first place.
Like our teachers always said, your first answer is usually the right one.
The real question now is do you invest in Amazon or buy Netflix at this bargain price?
Lastly, Blueberry ice cream! Awesome.