Let's Talk About Amazon

With the news of Jeff Bezos passing Bill Gates for richest person, I wanted to start a discussion about Amazon.

Amazon is a stock I've always struggled with. I'm an older millenial, so my finance career didn't start in earnest until the financial crisis, so while I've had chances to invest in AMZN sub $200/share, I've never been able to bring myself to buy it because I've always looked at traditional valuation metrics. leaving aside for the moment that the company purposely does not have much in the way of net income, it still trades 3x in the industry average when you look at price to cash flow (Bezos's preferred line item is cash flow). by most measures, it's an expensive stock.

as a consumer, I love the company. here's one central place where you can buy literally anything. recently my purchases have included obscure ingredients for southeast asian cuisine, workout shirts, outfits for wifey for our next vacation, and even house decor. the prices are competitive (I still remember the early days of internet shopping where you'd have to go to at least 5 websites to be sure you were getting a good deal), shipping is great, and customer service is unmatched. AMZN made a mistake for the first time in my experience with them this past christmas and they could not have handled it better.

at the same time, I worry about them getting too big and being broken up. if they don't get broken up, the company to me seems to be priced on future parabolic growth, which I have a hard time stomaching considering their already massive size and already thin margins.

help me out WSO, what am I missing?

DickFuld jankynoname Sil @Going Concern" GoodBread Frieds

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Comments (81)

Jul 27, 2017 - 11:01am

Bezos runs Amazon like a startup fighting for its life, except it's an aircraft carrier-sized startup carrying nuclear cash bombs for whenever a competitor dares refuse their buyout offer. IMO, Amazon is just taking advantage of regulatory lag by expanding as much as possible and as quickly as possible before regulators inevitably begin to wonder whether they should do something. Make no mistake, Amazon will catch heat from Washington sooner or later, but I think they're doing the right thing.

I personally have used Amazon to buy random shit since around 2003, and it's my go-to site for absolutely everything. This week: one of those self-wringing mops, a Guy Fieri(sp?) pan, shave oil and shave soap, a book. Last week, even more shit. I've probably shopped at Amazon more than any other place in my life. Amazon Prime is a necessity for me. It's gotten so bad I don't visit regular stores anymore, and why change that behavior when you can have a constant stream of "hey I kinda needed that!" stuff waiting for you at home every day?

in it 2 win it
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Jul 27, 2017 - 12:52pm

Good eye. Gotta keep my dome clean-shaven. No Gillette fusion or whatever allowed in my house.

in it 2 win it
Aug 23, 2018 - 1:08am

Super late here, but lurking for content and saw this thread. You discuss regulators stepping in, but I'll objectively ask, why? or better yet, for what reason? Amazon is a prime example of the new age monopoly, yes... but unlike the old behemoths of the past, they don't use their scale and power to hike up prices (which in turn hurt consumers), they have been able to lower prices and have made it easier for consumers to buy everyday products (save time from going to the store). Not only is the traditional sense of regulating a monopoly hard to act upon (given they lower prices vs. hike prices), but Amazon has astutely allowed 3rd party merchants to utilize their retail site and sell goods to consumers. Regulating Amazon itself could potentially have debilitating effects on the smaller 3rd party merchants too. Not to say regulating the company can't happen, but there would have to be significant changes with regards to antitrust law to make regulating their scale and power even possible - not an easy feat, given the inaction in Washington. It's also hard to argue that they have a monopoly in retail, given they only have a 5% market share in total retail spend. Just my thoughts. I've been long AMZN since $850/sh (took me a long time to make a move - I was even shocked that the Sequoia Fund bought AMZN given their value-investing philosophy) but I tend to be more thematic and focused on trend than traditional valuation metrics. But I understand valuation is a weighing machine in the long-term.

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Jul 27, 2017 - 11:48am
thebrofessor:

at the same time, I worry about them getting too big and being broken up. if they don't get broken up, the company to me seems to be priced on future parabolic growth, which I have a hard time stomaching considering their already massive size and already thin margins.

help me out WSO, what am I missing?

Amazon's Cash Conversion Cycle is about -14, Walmart's is 6. I'm not going to go do a DCF but I'd imagine the 2% margin that Amazon has right now would go back to being negative if it's suppliers didn't want to be squeezed anymore.

Which means if I'm Walmart, do I try to chase after Amazon's suppliers? Or, do I start to squeeze mine?

In my mind those are the questions and I guess you could take either side on them. But at a P/E of 200+, someone else can take the bet.

Best Response
Jul 27, 2017 - 1:05pm

I think Amazon as a business is incredible but I agree with you that as an investment those multiples will most likely contract at some point, the million dollar question is how and when. I would have to think that since it doesn't make any money that it would come when growth slows. Growth stocks don't stay in the high growth phase forever so it is inevitable. Even if Bezos eventually puts everyone out of business, AMZN would grow closer to GDP when there's no share left to take.

There are some ways to look at it and potentially justify its price (although I do not subscribe to this thinking, I just try and look at it from the point of view of buyers). Example: From 2007-2010 AMZN spent roughly 5% of revenue on R&D and in 2016 it spent closer to 12%. Now you could argue that elevated spend is necessary to facilitate its high growth and thereby maintain these high multiples, but if you consider R&D a more discretionary expense and try to normalize that to 5% in 2016 Amazon nets around 8.5% and has around 24.08 per share in earnings. At the end of 2016 Amazon closed at 749.87. If you throw a PE on those "adjusted" earnings its 31.14, much more reasonable. If you take that one step further and convert it to a PEG based on 25% top line growth (since you can't really use earnings growth) you get 1.25. Would that have justified buying Amazon at the end of 2016? Probably for some.

Personally I think that Amazon is destined for government intervention if it continues to grow into different markets and pursues more high profile acquisitions like WFM. I actually posted some thoughts about Amazon and why I think it could eventually be bad for consumers not too long ago Here . Amazon actually has a lot of anti-competitive practices already that don't make it into the headlines and it's absolutely a monopoly on retail distribution today. The biggest reason that Amazon isn't under the microscope is because there really is no precedent for government intervention when the company is actually providing consumers lower prices. But at what point do low prices hurt consumers and at what point will Amazon defeat enough competitors that it can raise prices?

Also Amazon doesn't make any money because its prices are too low but it keeps taking share because its prices are too low. Eventually one of those dynamics will change. I don't think that it has been making the best moves strategically as of late, getting into low margin businesses like grocery, opening physical book stores, adding more debt. It was able to scale and grow so fast because it didn't do those things, and Amazon already has no room for error with margins as tight as they are. If it keeps adding cost with moves like that it starts setting up for future pain with its current valuation, especially if growth slows.

I'm a customer but not an investor.

Jul 27, 2017 - 5:21pm

Don't ask me....

In retrospect, I should have invested but never did. At first, I thought 'books'? Too boring and not a big enough market. Missed that one as they expanded into EVERYTHING. I've always thought it looked too expensive as well, but do realize they could increase profits massively by just raising prices. However, how much do they lose in sales if they do that? I have no idea. Therefore, I will probably always remain on the sidelines. If I change my mind after so many years and get in, I'll let you know. You'll make easy money on a short position.

Of course, since I invest in index funds/ETFs, I guess I do have exposure, but obviously I never made a homerun with it.

Jul 29, 2017 - 2:38pm

Can't be everywhere all the time ..just one of those things I suppose. Some people got extremely lucky with their positions. I'm expecting as soon as the US government cracks down on Amazon due to them successfully destroying the retail industry and the jobs that accompany it, the stock price will tank shortly thereafter. It's kind of sad the degree to which low income/low skill jobs are disappearing. Manufacturing jobs and now retail? Where are those people going to go for work? Not everyone wants to be a smart techy hipster or engineer. Maybe we'll see a big opportunity spring forth from that situation.

If you find yourself feeling lost, go climb a mountain.
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Jul 27, 2017 - 8:23pm

Up front, as a consumer, I happen to like Amazon - namely because it's great for buying things cheaper than its peers and getting products I want that I can't find locally or I don't mind waiting for, especially with Amazon Prime. Like you, I've bought all sorts of things, from cookware and spices to home decor to home renovation products, on Amazon because it has aggregated things and made it easier to find. So people will continue to use it.

At the same time, you have people like David Kahan, the CEO of Birkenstock, who has blasted Amazon for their sales practices. While it's great for the consumer, it destroys businesses. Just announcing that were doing a meal kit to compete withlike product sent shares of Blue Apron, which saw their share price drop 40% on the news. When Amazon announced the WFM purchase, supermarket chains dropped a few percentage points that day. That shows the power that Amazon has.

When I look at the valuation metrics, what stands out is their near 200 P/E ratio. That makes me wary of investing in them. I don't care how much growth they are seeing, This is already a tricky market to begin with, with one of the highest CAPE ratio's we've seen in a long time, and the fact Amazon's P/E ratio has stayed at that level keeps me from touching them. I know P/E isn't the sole metric to rely on, but I keep coming back to it. On top of that, their ability to squeeze pennies out of every single partner they have will eventually bite them in their ass. It's reminiscent of Walmart's ability to drive their costs so low, but I can't see it as being sustainable in the long run. You're going to see this come to a head with the WFM acquisition. I firmly believe that Amazon will not be able to squeeze the margins out of some key areas of the grocery business (particularly the meat business) and that's going to come back and hurt them because it will give suppliers some proof that actively telling Amazon to fuck off can work and lead to a supplier revolt.

With that in mind, I honestly believe that Amazon will be broken up. There is no way in hell they wouldn't be. It has Grandma Bell written all over it, particularly because they are pricing things so low to gain market share and have driven competition out of business which harms actual job growth. I think that in the next 18-24 months, an Antitrust case is filed against them which sinks the company. But I also think people will freak when this happens and not take anything but an Amazon win lightly. I think that an anti-trust suit against Amazon will open the door for an anti-trust suit against a slew of other large, monoplistic companies like Google as well. Politically, if there is an actual shift in sentiment to more populism or a shift to Pre-Watergate Baby Politics where the creation and development of small and medium businesses is important again, then expect the move for a breakup to go full steam ahead.

I'm not touching them with a 10 foot pole at this point.

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Jul 28, 2017 - 7:52am

I don't think their interest in WFM was strictly about groceries. That's a lot of stores in high income neighborhoods throughout the country.

Jul 29, 2017 - 2:21pm

No, their interest in WFM is not solely about groceries, its about expanding Amazon's grocery business. No matter the client base, WFM is a grocery store at heart. and with that, Amazon will still need to cater to that. Expect them to try and push margins on an already low margin business even tighter to try and eek out what little bit they can. I mean, the move is an extension of Amazon Fresh, or Pantry, or whatever the hell they are calling it. However, there will come a point where suppliers will not take being squeezed and will tell Amazon to GFYS. The suppliers won't see their business get hurt. In certain areas, particularly where meat, fish and poultry are concerned, this is going to be a big problem for Amazon and where they get burnt. If grocery suppliers are willing to tell Amazon to fuck off, that may cause a slow shift to other companies doing the same with Amazon and may very well be the catalyst for an Antitrust suit to come to fruition.

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Jul 27, 2017 - 9:25pm

I use to work at a fund where we kept coming back to the AMZN short thesis every quarter. If you're looking strictly at earnings, the stock is clearly epically overvalued. The bulls' argument is that Amazon is just expanding market share and that if it slowed down on that front, margins would expand and earnings skyrocket. But is that really all that likely, ever? What happens if Amazon overreaches? If like you say its broken up?

This is probably financial heresy but I think the way to look at this is buy and hold, with some downside protection for a while. What I mean by that is that if you bought in at $200, you're probably justified in staying for the ride with minimal downside protection. If you're buying in right now, some otm puts might make sense in case the valuation suddenly implodes. If in a year or two the stock has powered way up, time to toss the puts and leave however much money you want in the stock.

The potential of Amazon is what's truly staggering. I was reading this great article about the start of the company today and it's crazy to think back to the early days (https://www.wired.com/1999/03/bezos-3/) when they had a bell ring for each sale. I probably used the internet for the first time in 1995 but it was a few years later that I heard about Amazon (not like I had money to ship books to myself in the second grade anyway). It seemed like one of the best ideas the internet had come up with so far. The fact Barnes & Noble didn't come stomp it out is almost miraculous but that's a testament to corporate short-sightedness and the power of good execution.

3 years ago when I was writing up a short thesis on Amazon, one of the most preposterous things about their plan (to me) was that they wanted to get into media content creation. Fast-forward 3 years later and their Amazon tv shows are crushing it at awards shows and I probably use my Prime subscription as much as my Netflix.

Amazon's execution on almost everything they do has been stellar for a very long time now. The economics are not like Google or Facebook's, but the potential reach in our daily lives is nearly as massive, and has a much more tangible connection the the real economy.

My takeaway is don't sleep on AMZN. But make sure you know where the exit is.

Jul 28, 2017 - 7:45am

The end of exponential growth isn't the end for Amazon, that premium will come off, but they'll probably commit to becoming a dividend stock that still throws it's weight around to make moves.

Jul 28, 2017 - 7:04pm

Not really qualified to talk about them from an investor standpoint, but if I buy almost everything I can from Amazon and have for almost 15 years. Books, video games, underwear, tshirts, sneakers, toiletries, random household shit, golf balls and golf gloves, office supplies, probably 75% of christmas presents for random people, etc. Plus I watch movies via Prime all the time.

Commercial Real Estate Developer

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Jul 30, 2017 - 4:54pm

Wish I had some insight to offer, but all I can think about was back when Amazon just sold books. I remember in high school we needed some book for a class, and a classmate recommended this place called Amazon. This was back in the early 2000s, so Amazon had already existed for almost a decade, but I never heard of it. It's crazy how they now sell pretty much everything. Now, I buy almost everything from them, especially since their Prime card gives unlimited 5% cashback on everything.

Jul 30, 2017 - 10:23pm

I've been inside an Amazon warehouse before. It is fucking sweet, with all these robotic things moving around and shit. That being said, I think there's a lot of uncertainty in the new directions they're going, with grocery stores, drone beehives, etc. Similar to Tesla. This is stuff that no one can really predict, so it's a gamble for sure. That's my 1 cent

Jul 30, 2017 - 10:24pm

Why Amazon is this $4 Billion Manager's most Bullish Bet? (Originally Posted: 09/25/2017)

Hey monkeys,
I recently ran across this article.

Justin White, a 36-year-old who manages the T. Rowe Price New America Growth Fund, says his biggest bet right now is on Amazon. It's no surprise to most that stock pickers heavy in tech positions have seen large gains this last year.


Their competitive position in both the core retail business and in their cloud business is just so unassailable. The market they're targeting is so large that they're just going to keep winning. They just keep gaining share at a healthy clip in this enormous market, and they'll replicate the strategy in more markets across the world as they can."

The largest criticism behind Amazon is that the company focuses on growth rather than profitability. The company is still spreading its wings and is, without a doubt, a core cause of many companies' problems.


"I think that it has the deepest moat [or competitive advantage] of any business model out there, neck-and-neck with Google," White said. Apple, Facebook, Intuit, and the Google parent Alphabet were among his fund's largest holdings as of the end of the August.

White said there were "only a few battles" in established, physical retail that he's chosen to fight. But otherwise, it feels as if those companies are heading in the other direction over the long term.

"Brand equity is not what it used to be," White said. "You can see that across the consumer-staples environment where the revenue growth from a lot of historically steady, slow-growing consumer-staple companies has deteriorated. I think a lot of that is the fact that consumers don't really value brands as much."

Jul 30, 2017 - 10:25pm

You act like $4B is a lot of money in AM. SPY is north of $200B.

The only difference between Asset Management and Investment Research is assets. I generally see somebody I know on TV on Bloomberg/CNBC etc. once or twice a week. This sounds cool, until I remind myself that I see somebody I know on ESPN five days a week.
Jul 30, 2017 - 10:30pm

Amazon (Originally Posted: 02/23/2013)

Does anybody on here cover the retail industry?

I'm looking into buying AMZN long-term, and after looking into the financial statements, it's obvious why their margins are so small, and I agree with why they are keeping their prices so low. There's still an incredible amount of business for them to snatch up, and larger retail competitors like TGT and WMT are freaking out, and trying to keep up with price matching, shifting their focus to ecomm, etc.

I see Amazon, along with supply chain service companies like UPS, taking over the world here in the near future. Are there any other plays here? Will mostly likely buy after a 5% market pullback.

Jul 30, 2017 - 10:33pm

Hooked on LEAPS:
A little late to the party?

I'm specifically thinking 10-20 years down the line.

The party hasn't even started yet when you think about the competition, and where Amazon can still go from here.

Jul 30, 2017 - 10:34pm

I think you need to think about how much of your investment thesis is already priced into AMZN. Is your prediction of their growth and dominance different from market consensus? If not then you may be right in your prediction but it's not going to make you any money. AMZN trades at big multiples already, so you have to have a good reason for thinking it's undervalued at the current price.

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Jul 30, 2017 - 10:36pm

Boothorbust:
I think you need to think about how much of your investment thesis is already priced into AMZN. Is your prediction of their growth and dominance different from market consensus? If not then you may be right in your prediction but it's not going to make you any money. AMZN trades at big multiples already, so you have to have a good reason for thinking it's undervalued at the current price.

You're right that it looks very overpriced, especially looking at the graph, but I think the reason for that is they haven't put much effort into profit maximization yet, so their multiples are out of wack. They're still trying gain market share in the online retail space, and once people realize the online shopping experience is better, they can then focus on raising their margins.

Remember when we all thought that Apple was too expensive at $100? Well, at least I did, and I never bought a single share because of that.

Jul 30, 2017 - 10:43pm

Biggest Day of Sales Ever For Amazon (Originally Posted: 07/13/2017)

As most of you know, Tuesday was Amazon's annual prime day. Prime day is described by Amazon as a "retail holiday" in which Prime members ($99/yr) get some pretty good deals on products. As for the numbers, according to Fast Company:

Amazon sold:
-2 million toys
-1 million pairs of shoes
- 90,000 televisions.
-This year's top sellers included the Echo Dot, Instant Pot's programable pressure cooker, and a 23andMe DNA test.

Prime day started in 2015 as a way to celebrate the company's 20th anniversary. Since then, the day has taken off exponentially. As proof, this year's sales beat out 2016's by 60%. Unfortunately there was no dollar amount released by Amazon, but analyst estimate around $1 billion dollars in revenue was brought in on Tuesday, up from $400 million in 2015. Amazon did announce Prime day as Amazon's best sales day ever.

What did you guys get? Did anyone see any really good deals out there?

Jul 30, 2017 - 10:47pm

There Goes Amazon Again (Originally Posted: 02/09/2018)

Amazon announced today that they will launch a delivery service to compete with UPS and FedEx. WSJ

Amazon continues it's quest for world domination and getting into the delivery business is just another step. They plan on undercutting the prices of other delivery services to gain customers. Both the FedEx and UPS stocks are down today after news of Amazon jumping directly into their industry, just like when Amazon jumps into any industry.

Amazon already has Prime Air, whose plans fly over my house every day. Looks like they will now be taking their talents to the ground delivery sphere.

It's Amazon's world and we're all just living in it apparently.

Jul 30, 2017 - 10:50pm

Amazon Goes for the Jugular (Originally Posted: 08/18/2011)

There's no question that Amazon is the undisputed world champion in book distribution. But now they're making moves into mainstream publishing - and that could spell doom for their already hobbled competitors.

Amazon basically created the market for e-books (where you can find such classics as The Guide to Understanding TARP), and now they're making in-roads into traditional print publishing with the signing of mega-author Tim Ferriss and his next book, The 4-Hour Chef. Love him or hate him, Ferriss sells millions of books.

The 34-year-old Ferriss is a natural choice to be the first Amazon Publishing writer. He is adept at new media (270,000 Twitter followers), expert at publicizing himself (the readers of Wired magazine gave him the self-promoter of the year award in 2008), and a start-up investor who sees nothing but shiny promise in technology.

"Amazon has a one-to-one relationship with every one of their customers," the writer said. "You can just imagine the possibilities that opens up."

Mr. Ferriss said he had approached Amazon about a book deal. Crown did not get a chance to match the offer because in the writer's view, it never could have.

"The opportunity to partner with a technology company that is embracing publishing is very different than partnering with a publisher embracing technology," he said.

Ferriss makes a good point: Amazon has the ability to be nimble where traditional publishing houses are mired in an ancient business model.

My concern is on the anti-trust side of things. If Amazon Publishing starts to dominate the print publishing business, they become a one-stop shop for the written word. They already control global book distribution (for the most part), own far and away the most popular e-book distribution and publishing service (through their proprietary Kindle and CreateSpace), and if they take over the print publishing business they'll hold all the marbles.

At what point do the feds step in with anti-trust legislation? When does Amazon become a monopoly? I think it's one of the best run companies on the planet, so it's hard for me to see this next step in their evolution in a negative light. But isn't it bad for humanity if more than half the written word in the world comes from one source?

I know I'm getting ahead of myself, but this move is making folks in publishing really nervous.

By the way, anyone excited about The 4-Hour Chef? I'm already a pretty decent cook, so I might wait for The 4-Hour Neurosurgeon.

Jul 30, 2017 - 10:53pm

I would love to own Amazon stock; its performance has been incredibly over the past two years. No dividend yet, but that shouldn't matter as much.

I don't think Amazon is going to become the victim of anti-trust legislation, because it's still essentially a 3rd party vendor that allows allows millions of other independent vendors to use their infrastructure. Legally, that isn't a monopoly. Ticketmaster has been doing the same thing and dodging the lawsuits the whole time.

Also, Amazon so far keeps getting away with paying no state income taxes. I don't know how they do it, but that sure is part of the appeal!

Metal. Music. Life. www.headofmetal.com
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Jul 30, 2017 - 10:55pm

Got to be honest, I liked the Four Hour Work Week because I realized you need to take most of what he says with a grain of salt. After all, it's a guy making money by telling you how to make money. And his vitamin company sounded pretty scammy.

I find Ferriss, personally, to be a douche who tries too hard to be interesting and unique. I remember reading a blog in the NY Times a couple months ago about him, and they explained that he was working to "perfect the backflip." I read that and simply thought, this person is a douche. It's almost hard to put into words, but I'm sure I'm not alone on this.

Jul 30, 2017 - 10:56pm
TheKing:
Got to be honest, I liked the Four Hour Work Week because I realized you need to take most of what he says with a grain of salt. After all, it's a guy making money by telling you how to make money. And his vitamin company sounded pretty scammy.

I find Ferriss, personally, to be a douche who tries too hard to be interesting and unique. I remember reading a blog in the NY Times a couple months ago about him, and they explained that he was working to "perfect the backflip." I read that and simply thought, this person is a douche. It's almost hard to put into words, but I'm sure I'm not alone on this.


Good books, but I'm not a fan of the person either: a family member read his 4-hour work week and refuses to get a job now. They leave out the part that he grew up with money and had someone to fund his random shit until he made money. He's the publishing version of Trump: writing about how to become wealthy when in fact you came from money is bad for the youth who don't know any better.
Edmundo Braverman:
At what point do the feds step in with anti-trust legislation? When does Amazon become a monopoly? I think it's one of the best run companies on the planet, so it's hard for me to see this next step in their evolution in a negative light. But isn't it bad for humanity if more than half the written word in the world comes from one source?

I share the same concerns but have no answers. I will add this: by not taxing them, the government has effectively tied one hand behind the backs of their competitors, thereby helping a better business grow. +1 for the government?
Get busy living
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Jul 30, 2017 - 10:57pm

Life is a lot less annoying when the people that you listen to and get advice from don't try to pretend that it should be fun and easy. Life is not a day on some Hawaiian beach unless you were born into wealth like Ferriss, and we need to recognize that our trials and tribulations are what make us stronger and help us grow as human beings.

Also, I don't think anyone wants to spend four hours cooking. Seriously, who suggested that title? I am going to call my book "The Four second chef" charge $19.95 for it, and the first (and only) page will be "Food trucks and done."

If I suspect my son is starting to turn into Ferriss (a slothish infomercial pitchman who thinks he has the free time to perfect the backflip), I am cutting him off.

Jul 30, 2017 - 10:58pm

I've been a big fan of Ferriss for a while now, so I feel like I gotta stick up for him...

Ferriss definitely didn't come from money. Like many of us, he found himself in an all-consuming job post college and felt he was in a rut after a couple years. Being based in Silicon Valley, he followed the culture of the area and started his own company that significantly increased his income, but also soon became all-consuming. It came to a point where he was so fed-up with his 24/7 365 work lifestyle that he up and left everything on an impromptu vacation. He thought all his business would fall apart, but it didn't.

4 Hour Workweek not literally about working 4 hours a week, it is about the things he learned about streamlining and automating his life so that one can spend the majority of their time focusing on things they enjoy. He wrote 4 Hour Body because he's also a big fitness geek and felt he could apply some of the same principals he used to streamline other parts of his life... and obviously to make some bucks.

Now he's capitalizing on his success... how would any of us behave differently?

Jul 30, 2017 - 10:59pm
villalobos:
I've been a big fan of Ferriss for a while now, so I feel like I gotta stick up for him...

Ferriss definitely didn't come from money. Like many of us, he found himself in an all-consuming job post college and felt he was in a rut after a couple years. Being based in Silicon Valley, he followed the culture of the area and started his own company that significantly increased his income, but also soon became all-consuming. It came to a point where he was so fed-up with his 24/7 365 work lifestyle that he up and left everything on an impromptu vacation. He thought all his business would fall apart, but it didn't.

4 Hour Workweek not literally about working 4 hours a week, it is about the things he learned about streamlining and automating his life so that one can spend the majority of their time focusing on things they enjoy. He wrote 4 Hour Body because he's also a big fitness geek and felt he could apply some of the same principals he used to streamline other parts of his life... and obviously to make some bucks.

Now he's capitalizing on his success... how would any of us behave differently?

Did you write the copy for the inside cover of his book or something? 4 Hour Work Week has good ideas, but again, it has to be taken with a grain of salt. My bigger issue is really that he comes off as a "look at me and how interesting I am" type of douche.

Jul 30, 2017 - 11:00pm

He grew up in the Hamptons and went to a private boarding school before Mom and Dad paid for a $150K liberal arts degree at a private university. You still saying he's poor?

And the 4-hour chef is a horrible, horrible title. Who wants to spend four hours cooking?

I am going to sell the 4-second-chef on Amazon for two easy payments of $19.95. And reading it will take two seconds. "Food carts and done."

Jul 30, 2017 - 11:02pm

Illiniprogrammer: I'm not saying he's poor, and I guess I can't really comment on the background of his family. I'm pretty sure he was an only child, so you're right that extra attention could be interpreted as part of a privileged upbringing. However, he does say that while growing up his parents family never made a combined more than 50K year (source: http://www.fourhourworkweek.com/blog/faq/). Either way we can agree he definitely didn't come from the projects, but I don't think his success can be attributed to his family more than any other person who grew up in the middle class. 4-hour chef is a shitty title, but I guarantee it will make it sell.

TheKing: Maybe I should write the inside cover... anyone got any connects at Amazon to hook that up? 4HWW definitely needs to be taken with a grain of salt, even from the title page... Ferriss obviously doesn't sit in a hammock on a beach all day. He might be/look like a douche, but he's done some pretty cool stuff and some of his ideas work pretty well.

Anyone want to back me up?

Jul 30, 2017 - 11:04pm
TheKing: Maybe I should write the inside cover... anyone got any connects at Amazon to hook that up? 4HWW definitely needs to be taken with a grain of salt, even from the title page... Ferriss obviously doesn't sit in a hammock on a beach all day. He might be/look like a douche, but he's done some pretty cool stuff and some of his ideas work pretty well.

How many of his ideas have you tried? In particular, did you fund your own "mini retirements"?
Jul 30, 2017 - 11:03pm

IP, there's no "perhaps including Eddie". I'm definitely a fan. I've used 4HWW strategies to help fund a lifestyle most people will never see, and there are people on WSO that have taken it much further than I have.

And just for the record, The 4-Hour Chef isn't about cooking for four hours. I'm guessing it's about preparing meals that normally take 4 hours in 20 minutes or less.

Jul 30, 2017 - 11:10pm
Edmundo Braverman:
And just for the record, The 4-Hour Chef isn't about cooking for four hours. I'm guessing it's about preparing meals that normally take 4 hours in 20 minutes or less.

But what about Ferriss's arguments about outsourcing? Cooking is the perfect thing to outsource if you live in NYC. I can spend $5 on two delicious Kati rolls at the food cart and get on with my life, or I can spend 15 minutes cooking one of Ferriss's gourmet meals. I value my time at $25/hour when it comes to doing things myself (~$13/hour when living outside the city) so in general, I am going to be inclined to outsource dinner.
IP, there's no "perhaps including Eddie". I'm definitely a fan. I've used 4HWW strategies to help fund a lifestyle most people will never see, and there are people on WSO that have taken it much further than I have.

I'm happy for you Eddie, but wouldn't it have been better if you'd been able to flat-out permanently retire and not have to worry about income from businesses? Suze should be able to get a banker to 30-35 retired pretty darned easy, and I still have lots of room for hang gliding, motorcycle racing, and other fun outdoor sports in the meantime. Better yet, I get to laugh when the economy goes over a cliff- in addition to laughing cheering when it goes up- while so many people here go into panics and lose sleep.

Tim Ferriss's strategy works great if you have $700K saved up or a rich family to fall back on and are willing to run a business until you drop dead. But if you follow Suze's plan, you can have a couple million saved up instead, buy a cottage in the Adirondacks, and spend your days chasing thermals without concern for where your next buck is going to come from indefinitely. Human beings weren't meant for financial worry, but Tim Ferriss can't eliminate it, there's a lot of dead bodies of Ferriss's victims that you've had to whistle past simply to be one of his success stories, and you could have gotten into much better financial shape if you'd worked two years more like Suze would probably suggest and not have to worry about whether or not your next gig pans out.

Jul 30, 2017 - 11:06pm

Here's reality. No single book will give you all the answers. You read many and piece together what works for you.

If I had asked people what they wanted, they would have said faster horses - Henry Ford
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Jul 30, 2017 - 11:21pm
FlySoHigh:
I think Patrick and Brian from M&I were fans of the book too, would love to hear some opinions from you guys about what has worked and what hasn't

Don't even try sustaining polyphasic sleep, or any hybrids outlined in the four hour body for more than a few days- I fell asleep during my 7am linear algebra exam after 45min of sleep through the night.

On the other hand, 4 hour work-week is one of the best books I've read.

Jul 30, 2017 - 11:08pm

IP, I've been out of undergrad a grand total of 8 months. I haven't yet orchestrated any grand schemes to utilize virtual Indian laborers to build a website that sells organic hemp iPad cases so I can go live care free in Buenos Aires for half a year. He doesn't recommend immediately quitting your day job, either... or forgetting sound principals for saving money a la Suze Orman. In fact, he offers some ways to get lots more bang for your buck, especially in regards to travel. The book has some interesting points on how you can organize your life, and I've used his strategies for getting in touch with hard to reach people to score what I'd consider some interesting career opportunities.

Overall, he's a proponent of working smart versus just working hard... which I sometimes tend to find myself doing. He's not the end all be all of self-help gurus that some make him out to me, just has some good ideas.

Thanks Eddie.

Jul 30, 2017 - 11:11pm
villalobos:
IP, I've been out of undergrad a grand total of 8 months. I haven't yet orchestrated any grand schemes to utilize virtual Indian laborers to build a website that sells organic hemp iPad cases so I can go live care free in Buenos Aires for half a year. He doesn't recommend immediately quitting your day job, either... or forgetting sound principals for saving money a la Suze Orman. In fact, he offers some ways to get lots more bang for your buck, especially in regards to travel. The book has some interesting points on how you can organize your life, and I've used his strategies for getting in touch with hard to reach people to score what I'd consider some interesting career opportunities.

Overall, he's a proponent of working smart versus just working hard... which I sometimes tend to find myself doing. He's not the end all be all of self-help gurus that some make him out to me, just has some good ideas.

Thanks Eddie.


Yes. The book has a number of good ideas. A majority, however, including big stuff like quitting your job every nine months, is junk science for personal finance and career advancement. Other stuff, like outsourcing stuff to a PA, at best takes the personal touch out of your life and at worst cuts you off from your family. Mini-retirements ruin your ability to save for retirement and make you look like a flake. The most damning part is that the book was written a year before the Great Crash.

The book has a a number ideas that may be redeeming to a highly intelligent and highly skeptical person. But they're probably not worth the $10 cover price and they're certainly not worth the 100s of horrible ideas that I think most casual readers will fall for.

Ron Popeil did informercials, including the infamous spray-on hair, but he strongly believed his products had integrity and he offered a money-back guarantee if you weren't satisfied. He even paid the return shipping and let you keep the gift if you were unhappy enough to return the product. The promotion king that sold "Four Hour Workweek" "Four Hour Body", now "Four Hour Chef" and likely soon "Four Hour Haircut", on the other hand, doesn't offer a money-back guarantee. Fool me once, shame on you, fool me twice, shame on me. I'm not buying another one of his books and I think most wise people are going to walk away after having wasted $10 on "Four Hour Workweek".

Jul 30, 2017 - 11:09pm

Illini, I think you're being a little too harsh on the guy. His first book is pretty good in my opinion, at the very least it opens your eyes to the possibility of leveraging your skills more effectively.

It's 4-hour Body that bothers me, especially the mass-gain section of the book, which I found contains a lot of junk science.

Jul 30, 2017 - 11:12pm
Aviator:
Illini, I think you're being a little too harsh on the guy. His first book is pretty good in my opinion, at the very least it opens your eyes to the possibility of leveraging your skills more effectively.

It's 4-hour Body that bothers me, especially the mass-gain section of the book, which I found contains a lot of junk science.


Have you taken one of the 3-month mini-retirements that Ferriss suggests where you quit your job and look like you got fired for the time? How did that work out?

Also, does your family know that you've outsourced your flowers and birthday cards to India? How do they feel about that?

Suze Orman advocates the polar opposite of this. Truth is what ultimately creates value in relationships and in finance. That means acknowledging how much you make- and living well within your means. It means acknowledging the economic climate we live in- and holding onto your career in a tough market until you have enough to never need to work again. It means having honest relationships. And when all of your secrets are out of the bag, including realizing stuff like the fact that Ferriss has trained you to forget your brother's birthday- it turns out that you generally sleep a whole lot better at night.

A former infomercial vitamin salesman is going to have a hard time wrapping his head around the notion that truth is the ultimate source of value. A former waitress, on the other hand, is going to have a different approach. Suze is 60 years old and looks 34. Ferriss is 34 years old and practically looks like he is at death's door, at least by the NY Times photo. Who do you think has been sleeping well at night over the past ten years? And is the extra effort that Suze asks for worth it?

Jul 30, 2017 - 11:17pm

IP, what Suze Orman book(s) would you recommend? Interested in checking one or two out

Array

Jul 30, 2017 - 11:18pm

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Jul 30, 2017 - 11:19pm

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