Google's stock takes a dump

Originally Posted by ur my bitch

FC is talking about buying and holding for years and years...for intrinsic value. Man, I'm just simply talking about MAKING $$$$. Isn't that what the stock market is all about, isn't it why people invest? Return on Investment, buy low, sell high???????

Jesus, after all this time you havn't picked up a single god-damned thing. You must be fucking RETARDED. I'm not going to debate this subject any more.

[ur my bitch]

LOL. What;s the matter? frutrated bnecause your finance professor and the Yahoo poll's of uninformed investors was wrong?

I did pick up that you said GOOG was crap and over priced, even at teh low $300's, yet I also picked up that GOOG closed today at $410.50, and is outperforming all of its peers for earnings and margin.

I also picked up that I have picked some winners, while you just sit and complain about nobody knowing what they are doing but you and your text book.

But, next time I'm ooking for a shitty stock, I'll make sure to ask you what you like. Obviously it must be opposite day for you.

I'm going to give you one more chance. If you are a halfway reasonable person with a shred of intellect, your reply should be "I see what you are saying, and I can accept the fact that some people have valid reasons for believing that Google may be overvalued." After all, for every share of Google stock that is bought, another share is sold. And many of these shares are from Google itself.

Value != Return

What's the value of a lottery ticket? A couple bucks, but if it hits the jackpot was it a good investment? No, you were just lucky. By your faulty logic, however, Google's stock price and analysts opinions are proof that Google is worth that much. It's completely backwards, and through this whole argument, you continually revert to stock price as affirmation that you are correct with your assessment of Google.

Every time I make a point, you reply with a personal attack. This does nothing for your argument other than make me dislike you. I am in college and this doesn't mean shit, 90% of my business education comes from outside of the classroom. I haven't mentioned a single thing that isn't very, very real. The dividend theory doesn't apply to Google's return, but it's a very good cerebral way to think about the value of a company (for people who aren't hopelessly thickheaded).

And you shouldn't be so fast to discredit academic investing. Unlike the hoards who are buying and selling shares on Scottrade, the real pros are using really, really academic and rigorous methods to spot investments. Take John Meriwether, for example, he was the founder of LTCM. Granted LTCM went bust, but for four years LTCM provided investors with 25% return, an unholy rate, by merely playing bond spreads. How did he manage this? He brought in the brightest of the brightest, including Scholes of the Black-Scholes model for pricing options. Blah, you think, these lame ass models are too academic to be applied in real-life. But LTCM used them, and used them well. The lesson they learned (from the Russian default) will prevent a similar collapse from happening again. Meriwether has started yet another hedge fund, and while I'm not sure if his cast is the same as last time, he is proof that brains and rigorous academics can be useful.

But you and I aren't Harvard grads with inside info on the NYSE. We didn't pioneer new models for pricing options, or find new methods for arbitrage. By the time we get to the market, most of the value has already been sucked out. Most of the widely available information won't help you in the least to spot a good investment, because everybody else has seen it too. The ratios that you so love to tote are available to any 12 year old on finance.yahoo.com.

Without the edge that the pros have, the only thing you can do is to base your decisions in the most logical manner possible. For me the question is: "Is google worth $120billion despite its hardships in finding lasting revenue other than advertising?" No, I say. Google is a wonderful company, but its not 80 PE wonderful. And if you can't accept the fact that I have very real reasons to doubt Google (without discrediting me), then you are ignorant and hopeless.

[THEINCREDIBLEdork]

What djfc is trying to get at in his slow and laborous manner is that sometime in the not-to-distant future stockholders is gonna get hurt. Unless google actually does something like start its own operating system or something outside advertising that is actually tangible, its destinned to fizzle like so many other hyped dot.coms. Google is overpriced due to its "buzz." I agree with him, but who knows google could still manage to stay ahead of the game.

its the fucking stock market for christmas sakes, its all up in the air, so please for the love of god let this thread die until that time comes.

[ur my bitch]

Incredible Dork...ssshhhhhhh, let the big boys play here. But, I'll pass word along to the powers that be, that you said Google needs to develop an operating system.

FC....I already told you that you have very valid points when it comes to Google. Half of the fun of my posting is because you get so riled up and get your panties in a bunch. You're too easy to get your buttons pushed. If you recall, I too also agreed with you about Google being over valued. I still don't disagree with your assesment of Google being over valued.

HOWEVER.....you are also stubborn and being very shortsigthed when it comes to the nature of stock assesment. You're absolutely correct, top scholars are VERY sought after for hte buy and sell side. The Bloack -Scholes theory is in use at plenty of hedge funds today. So is Graham and Dodd, another very academic model that values earnings streams and shows how to value earnings and apply a $ price toa stock that is equal to the risk free rate to invest. There are many models in usee that are being taught in school. If not, they wouldn't be taught in school, there is a reason they are being used.

Now, you need to be aware, when you are saying I am way too late by the time I get information, you need to realize.....these firms and individuals who are getting information "first", are typically getting a majortify of their information fomr my firm. I not only have access to all the data because I sell the systems that deliver it, but I train analysts and portfolio managers on the buy-side in how to use our systems, how to collect the data and also at times, how to analyze the data. I answer questions and train people on reading earnings, forward and time lagged earnings and esitimates. I also meet with Math PhD's who runthe quant "black box" investing models. These guys create their own proprietary formulas for back testing data, going back 30 years, and use these models to predict stock prices on the universe of stocks. Who do you think they call when they ned this data? That's right, Ur My Bitch.

Oh, 25% return is not unheard of. I am not going to name firm names, but I have clients returning 54%, 85%, 40% and more. The successful Hedge Funds are bringing returns like you wouldn't even believe. My clients manage BILLIONS of dollars. The funny thing is, I have conversations daly with portfolio managers. We discuss sectors and industries, we do Bottom up analysis and discuss what companies are showing strengths and weeknesses. I am on the cutting edge of this information because I am living it daly. I bought some stock yesterday morning because of a stroy that broke at 12:31am the night before. Again, it wasn't on a Yahoo wire serrvice, it was an institutional wire, but again, I know data that makes sense and will impact the price.

I can make plenty of wrong bets. But, guess what, my own personal portfolio has returned 29% since August 2005. 8 months and a 29% return ain't too shabby.
Now, a couple things you said...yes, an 80 P/E is too high. however, Google is trading at a Forward P/E of $46. Tht is more than reasonable. Also, if you look at the revenue growth rate and also the earnings growth rate, the forward EPS that helps make up that $46 F P/E is very realistic. I agree they should diversify, and I think they are taking steps to diversify their revenue stream. Ther is definitely risk as well, but that is why if you are a smart investor, you buy and then you monitor your buy decisions closely. Otherwise you can buy IBM or Coca Cola and just sit and wait 40 years until you retire and your money will still be sitting there, not grown by much, but there.

I shouldn't have pushed your buttons, because had I not, you wouldn't have been blinded by anger, and you would have seen some very valid points iin my posts, and you may have even learned something about stock analysis and reltive value.

I'm fucking hammered but if you think that yiour clients are comming close to the hay day of LTCM they are fucking mistaken... LONG TERM CAPITAL MANAGEMENT at its highest managed a portfolio of derivatives and other shit that totaleld over 1 trillian dollars.

[ur my bitch]

LMAO. LTCM is no longer in business.

My clients are in business.

My clients are some of the largest hedge funds in the world. Also a lot of small ones and start ups that are top portfolio managers leaving top hedge funds and going on their own. Raising capital and return on investment are two different things. I have seen plenty of hede funds raise tons of money because they are connected and have access to money, while the smaller shops return much better % gains. I have over 60 hedge fund clients...over 60 firms that rely on my expertise to help them make $.

Stick to what you know, not what you read in the WSJ.

[ur my bitch]

GOOG just blew away their 1Q number. Watch for GOOG to take off today with some solid price gains. Analyst estimates are now for the $540 stock price range, based on a $45-$50 P/E range for forward P/E EPS estimates.

1Q blowout; strength across all lines of business, especially international. Net REVENUE grew 18% QoQ(According to DJFC their revenue is weak - lol) . $1.53Billion in revenue. Revenue streams were from site revenue and Google-Network revenue. International was especially strong.

Hopefully GOOG will hire a midwest college kid to help them run their business. I can see they are in much need of DJFC's knowledge and expertise.

[ur my bitch]

oh, FYI, GOOG is up at $450.25 in pre-market open.

[Beebs]

UMB had it in post 80 basically, FC is trying to explain how shit works to people who don't know, and explaining how you should look at a stock as long term ownership in a company that you should expect to make profit (as he phrased, potential to pay dividends) and doing a great job. Paraphrasing Warrent Buffets view, people should be limited to 10-20 stock trades.

UMB understands all that I'm sure but is looking at it from a pragmatic outlook from his situation, ie more short term, if I understand your job. Explaining your job would help me more, I didn't pay enough attention

Am I right here?

[Beebs]

Originally Posted by THEINCREDIBLEdork

its the fucking stock market for christmas sakes, its all up in the air.

No offense, but that view will get you broke.

[ur my bitch]

not exactly. Yes, I agree that DJFC did a great job explaining the long term outlook of companies and explaining a very old school buy and hold forever strategy for looking at stock and how to choose. but, buying and holding until you retire is a flawed strategy, in general. Dividend yields and a steady stock can make it a viable strategy. However, in general, if you own individual stocks, you need to look at it differently. If you want to buy and hold until you retire, then buy a mutual fund and a pro manages the nderlying stocks for you.

However, my point was all based around making money in the stock market. I was addressing how the institutional investors look at a stock and how they make buy or sell decisions. Although you can analyze dividens all you want, what the institutional investors are doing will greatly impact your stock price. I was trying to explain a real world view on picking stocks and trading stocks. I don't by stocks to hold forever, I buy them to make money....period. I am only long 4 stocks right now, so I never invest in too many at one time. It's too hard to manage. I also own a mid cap mutual fund that i can let sit and grow. I was trying to point out that the traditional "brick and mortar" company valuation doesn't work for companies like Google, and there are many factors to look at, and one strong factor is the Streets opinion. Look at Google since this debate started. It started when Google was at $345 or $360 or so. As I type this, Google is trading at $437.18. even if you bought 10 shares back when we started this a month ago, you would have returned more than 21%..IN A MONTH. DJFC was so busy calling me retarded and telling me I am hard headed, yet I was pretty accurate in my assesment of GOOG and many other stocks.

As for me, I started my career as an analyst for Large Cap companies and after 8 months went to bond trading. did that for 6 yrs and got out of the business all together to sell tech and telecom for a few start ups. Got sick of that and now I work for a market data provider. I am a specialist for buy-side firms. I work with portfolio manager and analysts to get them market data and portfolio analytics and I help them make money. I help them use our toos to make better investment decisions. I work with them on how to screen stocks for selection, how to analyze stocks and also get them data to fill their quantitative models. I know I know, not nearly as qualified as DJFC, but I can only hope to do my best to one day learn the markets and company analytics like him.

I consider the issue done, I had no idea how much expertise you had, so I was talking down to you when I should have been asking for advise, but the thing that really got me riled up (and still frustrates me) is that I'm not talking about buy and hold at all. Not in the least. The only thing I'm talking about is why a stock has value, and that can be as short as a few seconds. By using ratios which depict the health of the company you are implicitly doing the exact same thing I am describing - even if you don't choose to think about it that way.