CNBC now has added the price of Google to its bug in the lower corner of the screen. I have written before that I have long lost touch with what is going on with this stock. It goes up everyday, people justify why it should be much higher and now this.
This feels like a mania to me. Would you be surprised if it moved 100 points in either direction. In terms of trying to trade this I am staying away. I don't get the move the stock has made. To repeat from past posts, there is nothing wrong with staying away from a stock you don't understand.
Wikinvest Wire
4 comments:
Google is a good stock to learn about because it is changing the world. Of course, it is not the only participant. Yesterday, I wrote about Cragslist. Craigslist is serving up millions of page views daily--wiping out newspaper classified franchises in city after city. The efficiency of Google advertisement is incredible but more complicated. However, when one learns that Craigslist offers free classifeds in 60 cities with a total of 18 employees, one can appreciate the power of the internet. Knight-Ridder is one of the big chains holding off Craigslist with free classifieds of its own.
The big picture must include an understanding that inflation includes the deflation of adds going from x dollars per word to zero dollars per word. This is a part of the Greenspan conundrum about why bond rates remain low.
During the bubble how many stocks had valuations and/or price trajectories that would, or maybe should, have warranted a similar CNBC "bug"? Just something to think about.
First, I agree with Jack about being able to learn from GOOG and media and information is evolving. They were right about the internet changing our lives but not that eyeballs matter, earnings still matter.
JoeC, good to hear from you again. To JoeC's point the pet and wedding stocks alone could have taken up the whole screen;-)
Roger you are right again; I read your blog daily because I learn from you. Of course I agree that earnings do matter.
CNBC just posted the following facts: 1) Google's gross earnings of $1.26 Billion in the first quarter were almost double 1st quarter of '04. 2) Gross sales were up 22% over the previous quarter. 3) Free cash flow was up 217% year over year. 4) The AOL/Europe deal is about to jump revenues 5) 39% of total sales--G-Mail, Froogle and Picasa--are all in "start-up" mode and ready to gain significant share.
The more important point is that almost all publishing, newspaper, magazines and books is going on line. Thus almost all print advertising is going on line. We have a very long way to go on this. Google's market share will decline, but total advertising revenues will grow for many years.
The point is well made that the CNBC Google ticker shows the level of hype in the stock. I will not buy at this price but I'm not ready to sell either. Short-term there is potential weakness and potential strength.
My sister just asked when I plan to sell Mom's shares; she would hate to see her ride it back down! Mom has a well diversified and mostly conservative portfolio. I find my sister's question frustrating. I am thankful to have hit a big winner and my sister should be happy versus worried that the stock will go down. I do not set stops or price objectives and I am generally a long-term investor.
Just for fun, my response was; $100,000 per share. My comment will probably get posted somewhere as another example of the unrealistic expectations for the stock. The reality is that I am watching the situation closly; at some point I expect to sell a few shares to to recover my original investment. Picking tops is much harder than picking bottoms so I often average out of big winners over many months or even many years.
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