The Fool\u2019s Take<\/p>\n
Amazon.com is a leader in e-commerce and cloud computing, two areas that helped net sales climb to $638 billion in the latest full year. After e-commerce earnings dropped in 2022 due to inflation, Amazon boosted profits by shifting U.S. fulfillment from a national to a regional system, bringing items closer to customers.<\/p>\n
This saved on costs and improved its ability to deliver faster. Meanwhile, Amazon Web Services (AWS), the world\u2019s leading cloud-computing platform, drives profits for the entire company. Amazon has gone all in on the high-growth technology of artificial intelligence (AI). It has developed about 1,000 generative AI applications to improve productivity and efficiency across its retail business, from front-end tasks like customer service to back-end tasks like coding.<\/p>\n
The company now has major growth opportunities in e-commerce, cloud computing and digital advertising, and it\u2019s using AI to boost revenue and improve profit margins. Amazon\u2019s shares recently traded at a forward-looking price-to-earnings (P\/E) ratio of 33, well below their five-year average of around 48, offering long-term investors an attractive entry point into one of the tech sector\u2019s most diversified players.<\/p>\n
Business Briefing<\/p>\n
(John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool\u2019s board of directors. The Motley Fool owns shares of and recommends Amazon.com.)<\/p>\n
Ask The Fool<\/p>\n
From C.O., Ballwin, Mo.:<\/b> What does it mean that McDonald\u2019s \u201caverage volume\u201d is 3.6 million?<\/p>\n
It means that over a certain period, such as the past 20 or 30 days, an average of 3.6 million shares of McDonald\u2019s stock traded hands each day between buyers and sellers. A stock\u2019s volume will vary from day to day, and it can be very different from the volume of its peer companies, because each company has a different number of shares. <\/p>\n
For example, McDonald\u2019s recently had 715 million shares outstanding, while Wendy\u2019s had 192 million and an average volume of 5.1 million. So there\u2019s more trading activity for Wendy\u2019s and less for McDonald\u2019s. Online data sources such as Finance.Yahoo.com often list both recent volume and average volume. If a stock\u2019s recent volume is much higher than its average, then something is likely drawing attention to the stock, such as good or bad news.<\/p>\n
From B.P., South Burlington, Vt.:<\/b> What\u2019s the best amount of personal liability insurance to carry?<\/p>\n
It depends on what you have to lose if you\u2019re sued. To prevent a lawsuit from becoming a financial catastrophe, add up the value of your home, belongings and financial assets. Add more for legal costs (though insurers sometimes cover those). Then carry enough coverage on your home and auto policies to protect yourself. <\/p>\n
If you have a lot of assets, you might want to buy an \u201cumbrella\u201d policy. Umbrella policies generally offer much more liability coverage (typically $1 million or more) and charge much lower premiums than homeowner and automobile insurance policies do. Insurance may be boring, but it\u2019s vital to protect yourself from potential financial losses.<\/p>\n
The Fool\u2019s School<\/p>\n
Part of the classic American dream is buying one\u2019s own home. It\u2019s a tricky thing to do, though, and is often one\u2019s biggest purchase ever. So heed these tips.<\/p>\n
Check your credit score:<\/b> The higher your credit score, the better interest rates you\u2019ll be offered, so it\u2019s worth taking some time to beef up your score if need be. Good ways to do so include paying down debts and paying bills on time.<\/p>\n
Shop around for the best mortgage:<\/b> Don\u2019t accept the first home loan you\u2019re offered; check with multiple lenders. Read up on different kinds of home loans, too, to see which is best for you: fixed-rate or adjustable-rate, 30-year or 15-year, and so on.<\/p>\n
Get preapproved:<\/b> Being prequalified (which means your lender thinks you can afford a given amount) isn\u2019t enough if you want to be a competitive bidder as properties become available. Have your lender preapprove you \u2014 meaning it has vetted your finances and is ready to lend you up to a specified limit.<\/p>\n
Be sure to factor extra expenses into your decisions:<\/b> For example, there will likely be closing costs on your home loan, and a home appraisal and inspection. You might also want to buy \u201cpoints,\u201d an up-front fee to shrink your interest rate. Once you own the home, you\u2019ll need to factor in homeowners insurance, maintenance and repairs, and property taxes.<\/p>\n
Don\u2019t buy more home than you can afford:<\/b> Crunch some numbers to see what kind of dwelling you can realistically buy and maintain. You don\u2019t want to spend so much that you\u2019re financially pinched.<\/p>\n
Employ a professional:<\/b> It\u2019s smart to enlist the services of an experienced buyer\u2019s agent. This real estate professional can offer valuable advice and guide you through the homebuying process.<\/p>\n
Don\u2019t view a home primarily as an investment:<\/b> Real estate can fall in value, just as stocks can, and it typically doesn\u2019t increase in value at a rapid clip. Instead, view your new home as a nice place to live.<\/p>\n
My Smartest Investment<\/p>\n
From Ivan, online:<\/b> My smartest investment move was a non-move: When my stocks tanked in value, I decided to do nothing.<\/p>\n
The Fool responds:<\/b> That\u2019s a smart move indeed! If you\u2019re investing in stocks, you need to accept that the stock market is volatile. <\/p>\n
Pullbacks of 20% or more happen every few years, on average, and smaller drops happen even more frequently. Despite all that, the stock market has recovered from every pullback and has eventually gone on to hit new highs. <\/p>\n
Thus, it\u2019s important to keep any money you expect to need within five (if not 10) years out of stocks, investing only long-term dollars in the stock market. Superinvestor Warren Buffett has often stressed the value of not overengaging with stocks you own. <\/p>\n
He has said, for example: \u201cThe trick is, when there is nothing to do, do nothing.\u201d He also advises buying into companies in which you have a lot of confidence: \u201cOnly buy something that you\u2019d be perfectly happy to hold if the market shut down for 10 years.\u201d <\/p>\n
It\u2019s also good to remember that if you\u2019re spending years building a portfolio of stocks, each market downturn presents a great opportunity to grab shares of wonderful businesses at depressed prices. <\/p>\n
(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)<\/p>\n
Who Am I?<\/p>\n
I trace my roots to 1900 and 1901, when two brothers who had been in the tobacco business started separate textile companies; they merged in 1965. In 1969, I introduced the wildly successful L\u2019eggs pantyhose. I ended up part of Sara Lee and then was spun off in 2006. <\/p>\n
Today, headquartered in Winston-Salem, N.C., I\u2019m a top innerwear company, with a recent market value of $1.7 billion. Brands wholly or partially under my roof include Maidenform, Bali, Playtex, Just My Size and Wonderbra. I\u2019ve won multiple environmental awards. I rake in nearly $3.5 billion annually. <\/p>\n
Who am I? <\/p>\n