You are watching market insanity. Buffet says in the short term the stock market is a voting machine, in the long run it is a weighing machine. This means popular opinion will drive the stock to astronomical values, but they will eventually fall to match the intrinsic value of the company as a business.
I would not necessarily short the stock, popular opinion can remain high for quite some time.
I personally like the value investment approach that Buffet advocates.
Investors don't buy based on the present. They buy based on future expectations of growth and profit. All of the stocks you mention have bright growth prospects. Investing in (or shorting) these is tricky business. On one hand, stock like Amazon has shown amazing growth over the years and the company is dominant. Tesla could become as big as Ford or GM. And Netflix is changing the way people watch TV. On the other hand, nothing falls faster than a momentum growth stock that slows or stops growing. It can get ugly, as in Blackberry and Green Mountain Coffee or even Netflix a few years ago.
My strategy is that if I invest in these stocks, it is not a huge amount (I own about $2,000 of Tesla right now, and recently sold about $4,000 of Netflix). I tend to hold it no matter what, trying to catch the long term gain that could be huge. I made about 100% on Netflix when I sold it, but then it shot up another $50. You will drive yourself crazy trying to buy and sell on dips and jumps.
Trying to outguess the market is a losers game.
Read the histories of such companies as Washington Mutual, Enron, Polaroid, Kodak, Montgomery Ward, Sears, AIG, Fannie Mae, Freddie Mac among many others.
Expect the Unexpected.
well how come these companies netflix,amazon and tesla have pe ratios out of this world. because their pe ratios so high the peg much be out of this world. what is the deal with thsee stocks? even though they are overpriced like mad, the market is still wanting them? so would now be a good idea to short it? would it be likely that its price in the future will match its growth? why is the market reacting like this? can anyone explaIin the behaviour?
