Why we still say ‘Dilly, Dilly!’ to Apple, Amazon & Facebook

By now, just about everybody has seen the ad campaign with the king who calls out “dilly, dilly!” whenever a subject presents him with a gift of Bud Light. The catch-phrase went viral and Anheuser-Busch is rolling out multiple variations on the theme. But it’s worth remembering the original spot, where one poor wretch makes the mistake of offering his monarch a “spiced honey-mead wine” and is promptly dispatched to the Pit of Misery.

We generally don’t get our investment philosophy from beer commercials, but the takeaway from this one bears reflection: Deviate from what is working at your own peril.

That’s especially relevant when it comes to three longtime holdings on which, notwithstanding an incredible run, we remain constructive, at least for the time being. Amazon, Apple, and Facebook may not be as novel as honey-mead wine, but the market is king. So long as they fit our investment guidelines and the market keeps saying “dilly, dilly,” to these names, so will we.

Amazon.com, Inc. (AMZN)

Operative guideline: Only sell when a stock stops going up or, worse, starts going down.

Amazon (AMZN) remains a top institutional holding as a disruptive e-commerce company that is changing the retail landscape.

Although trading at new highs, the stock remains a strong hold for the following reasons:

  • The company demonstrates escalating revenue growth and expanding profit margins.
  • After the strong Q3 2017 earnings, both money flow and relative strength—a stock’s performance compared to the broad market—turned positive and continue to be favorable.
  • There is no indication of a technical price break down, as analyst price targets continue to increase.

Future price action will determine sell/trim points for Amazon. But typically, high priced stocks going higher tend to be good buys or strong holds.