By: Pej Hamidi
Perhaps there is a good reason Amazon has become the “Hedgie’s” favorite stock to short against a truckload of long Apple shares. Do you remember way back in elementary school when they used to have the Apple II, then the Apple IIc came along with green and orange graphics. Then we had the Apple IIe. Then Steve Jobs was, I think let go around that time, and the Apple either disappeared from the computer room or started sharing shelf-space with the PC.
Well, I think the iPad will change all that. Or should I say, change it all back. According to an article at Wired.com entitled Colleges Dream of Paperless, iPad-centric Education, 3 Universities have ordered truckloads of the device to hand out to all students and faculty for free, or as part of their tuition. The point is, if this little experiment works, the good ole days of the Apple IIc might not be too far away. See, Amazon tried this last year with a version of the Kindle called the Kindle DX. But it failed to grab attention, was bulky, had no touch interface, and students at Princeton hated it. Oh my, if Princeton students hate it, then it must really suck. So now comes Apple with the coolest device on the planet, with built-in wireless, but here’s the catch, there are no textbooks (as of yet), for students to purchase for their iPad. Their only option is a company called CourseSmart, which “rents” out about 10,000 textbooks with titles from the five major publishers. Hence, the major downtrend in Amazon’s stock for a while now.
Dreamers had anticipated a takeover of the textbook market by Amazon and every college and University in the world getting one of the Kindle DX devices as mandatory for students and faculty. Well, throw that idea out the window and with it, your Amazon stock. To take some risk off the trade, or to actually make the trade complete, short Amazon and buy Apple, dollar for dollar, and let the trade work for about a year. I presume you’ll be quite happy and won’t lose sleep at night.
