Investment Psychology and Analysis of Amazon, Google and Domino's Pizza

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Investment Psychology
Every investor’s objective to investing is to earn high interests or dividends. Investment Markets
are unpredictable and investors need to keep cost low and a working strategy for long term
investment success (Yang & Wagner, 2014). It requires an investor to maintain and have
psychological discipline to make rational investment decisions. Psychological discipline is
important for avoiding or minimizing bias when making investment decisions. Investors with
psychological bias make decisions based on their emotions rather than reason. An average
human behavior to investment is influenced by herd mentality and the bull and bear market that
hinder making of rational decision in the stock price though peaks and trough (Maheu, McCurdy
& Song, 2012). The herd mentality makes investor to follow what others are doing in the
investment market forgoing their independent thoughts (Dang & Lin, 2016). The bull market
make investors to think in optimism thereby buying a stock that eventually lead to the stock
being overpriced. On the other side, bear market is characterized with investors’ pessimism that
leads to share price losing in the stock market value. The share prices are not static and keep
changing. The peak share price is the highest price while trough is the lowest price of a stock at a
specified period of time. An investor should buy shares at trough and sell them at peak to
minimize cost of buying and maximize the price of disposing thereby earning a high interest.
The following paper with discuss three companies that I choose to invest in. These companies
are Amazon Inc, Google Inc, and Domino’s Pizza Inc. The paper will discuss their financial
history and current standing, reasons to invest in the companies both emotional and logical and a
comparison to each company’s competitor. The paper will also outline prediction of the
company’s future performance.
Amazon.com Inc
Amazon is a cloud computing and electronic e-commerce company with head offices in Seattle
Washington. Amazon started it operations in 1994. The company is the largest internet retailer
measured by market capitalization and revenue in the globe. Amazon sells products online that
include books, software, video games, furniture, food, toys, apparel, jewelry, consumer
electronics, and cloud infrastructure. The company also offers shipping services to their
customers in different countries.

Amazon is listed in the NASDAQ stock exchange and it trading name is AMZN. The company
stock price is US$1405 as at 6th April 2018. Amazon had total equity amounting to $27.709
billion and assets amounting to $131.31 at the end of 2017 financial year. The company recorded
revenue amounting to $117.86 billion in 2017 financial year from $89 billion in 2014 FY.
Amazon has a share volume of 5882 257 trading with $6.15 earnings per share. Amazon past
peak price was $1617.54 while the trough was $884.49.
Amazon close competitor is Alibaba Group Holding. Alibaba is a multinational ecommerce, AI,
internet, retail, and Technology Company. Alibaba is listed in New York Stock Exchange and
trading name is BABA. Alibaba stock price is $172.07 compared to Amazon stock price of
$1405. The company total equity in 2017 FY was $48.33 and it revenue amounted to $ 23.82
billion. Alibaba revenue increased by 23% in 2016 financial year while the stock price increased
by 79% from 2014 financial year.
Amazon is a good company to invest. First, Amazons has a high revenue of $177.87 billion
compared to it close competitor Alibaba which recorded $23.82 in 2017 financial year. The
Amazon Stock’s value also increase by 192% as compared to Alibaba which increased by 79%
from 2014. Secondly, there is an increasing trend to use internet for purchasing product. This
trend will enable the company to increase its sales and revenue thereby increasing return on
capital. On the other side, Amazon is led by the founder. Amazon CEO Jeff Bezos knows the
company intimately and is likely to care about the company performance more than any other
person. A Company led by founder tends to outperform in the stock market (Chen & Vincent,
2016). The CEO also owns 78.89 million shares that are 10.1% of the company. The CEO
interests are therefore aligned with investors’ interests. The Amazon stock price will therefore
increase as a result of stock demand in the stock market and company sales performance
Domino’s Pizza Inc
Domino’s Pizza Inc is a pizza restaurant headquartered in Ann Arbor in Michigan. Domino’s
was founded in 1940 and has grown to be the biggest pizza seller in retail sales worldwide. The
company operates involve food delivery, franchising and restaurants. Domino’s products are
chicken wings, pasta, pizza, dessert, and submarine sandwiches. The company is led by David
Brandon as the chairman and Patrick Doyle as the CEO.