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Thursday, 15 April 2021

Decided to buy an Amazon CFD

Watching a video about the recent progress in AI, robotics, the Armenian-Azerbaijan war (that lasted six weeks last year and I hadn't even heard about - apparently it was won largely using armed drones to take out radar units, and then wipe out lots of tanks, armoured personnel carriers and troops sitting in trenchs etc.), I looked up how Amazon had performed (I knew it was insanely successful and the share price very high, but I hadn't realized that I could have bought shares for $50 back in the GFC that are now worth around $3,300! And the p/e of Amazon is not insane, just very high, at 80.

So having not made any money of the internet/online business boom, despite being around when the internet was first starting up (I was a system administrator back in the 80s) and losing money investing on a pre-IPO internet company (GEN) pre-2000, I decided I should at least have some explicit exposure to one of the FAANG companies. So I used my CityIndex CFD account to put in an order to buy one ( 1) Amazon stock CFD at US$3,330. If the order gets filled the trade cost is USD$15.00, and the margin is 20%, so it will use up a large fraction of the A$1,263 I currently have available to trade in that account.

I won't get rich owning the equivalent of one share of Amazon stock, but at least I'll get some satisfaction if it continues grow rapidly in future (provided my CFD position doesn't get closed out if there is a market correction).

update: The price gaped up at the market open, so I had to change my order price to be filled at a price of $3,377.00. In total my ASX200 and Amazon CFDs have market value of $6,049.55, so the 20% margin requirement is $1,209.91. I currently have $400.09 available credit, so if the overall value of these holdings dropped more than 6.6% I would have to either sell one (or both) holdings, or else transfer some more cash into the account.

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