(Editor’s note: this story was updated on Sept. 22 to reflect the latest post-FOMC meeting developments)
Amazon (AMZN) should just create a stock market that’s fair and honest and we should abandon this one for it. On a day like yesterday, when the Fed left rates unchanged, only a handful of people were able to buy the stocks that profited from the news, and if Jeff Bezos were involved he would quickly democratize trading.
That’s because Amazon — a stock in our Growth Seeker portfolio — would be able to offer machine-learning capabilities that would accurately prompt you about what you might want to do if certain circumstances occur. Here’s how it would work: Instead of looking for a book about a given topic, you would look for a stock that people like under different scenarios.
So you would enter “No Rate hike” and out would pop a series of offerings under the heading: “Customers who like ‘No Rate Hike’ frequently bought …” and then there would be little corporate icons with stock prices.
And what would Amazon have listed yesterday if you liked a “stay-the-course” scenario? How about the stocks of Acacia (ACIA) and Twilio (TWLO) , representing two of the fastest-growing tech companies in the universe? You would use Amazon Prime, and with one click ordering your stocks will be in your account instantly.
That’s right: no need to do more than that and you would own these stocks instantaneously at the best available price that Amazon almost always gives you! Who needs the darned stock market?
It really should be like that. Consider the stocks of these two companies, recent IPOs, both of which have long runways for robust revenues regardless of the hikes or the rate of hikes for that matter. Acacia is a communications equipment disrupter and Twilio is a software platform for much of internet commerce, including Uber, Airbnb and Facebook’s (FB) What’s App. (Facebook is part of our Action Alerts PLUS charity portfolio holding.)
Now, go look at intra-day charts of these two monsters that don’t need a whit of global expansion to make their numbers. At precisely 2 p.m., they took off like bats out of hell because the Fed statement made it clear that not only was there to be no hike but that the long-term growth forecast was trimmed.
That’s Twilio time. That’s when you reach for Acacia.
The problem is that the current algorithms, all owned by the biggest and fastest hedge funds, are so quick to respond that you can’t possibly keep up unless you have that Amazon button at the ready.
For years, when I worked at my hedge fund I had all of these stocks that fit the picture of a slowing economy at the ready. I killed it by knowing to take the stocks of US Robotics, Wellfleet Communications and DSC Communications on any statement about sluggish growth from the Fed.
My whole goal was to get these stocks before others could think of them, which is why I had them lined up and ready to go at the equivalent of 2:01 p.m. when the Fed speaks now, 20 years ago when it wasn’t as big a deal or as well-known a pattern.
Now because there is no Amazon button, everything is lifted ahead of you by the machine gun algorithms directed by high frequency traders.
If we had this machine learning instrument available on Amazon, I bet we could outrun the algo guys. Jeff Bezos simply hasn’t built his virtual exchange yet that would give us that chance.
High-growth stock picking, unfortunately, has devolved into a “he who draws first, wins.” We know that the paradigmatic growth companies are the ones that triumph with this set of growth statistics outlined by the Fed.
So they are the ones to grab.
The only way to equalize the situation, to get that stock at the same time, is if Amazon offers that button. We could keep it anywhere, just like our Amazon button that orders Tide when we are out of it. We just pick up Twilio or Acacia as fast as the big boys on the Fed news. And, with Prime, we would pay no commissions.
Can you imagine? Instant access to what the Big Boys have, delivered right to your door. Only Amazon can level the playing field post-Fed. Come on Jeff, set it up! Just one more perk for those who love Amazon Prime and one more nail in the coffin on still one more industry where retail investors buy and sell goods: the brokerage industry.