The Deipnosophist

Where the science of investing becomes an art of living

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Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

18 April 2007

Back aboard

With this post, Chad Brand swings back to my side of the investment thesis re Google/GOOG, bullish. Note his 5 points: that Yahoo/YHOO loses to Google/GOOG on seemingly every measure. Chad's final point is especially telling, as Chad now believes Google/GOOG shares are cheap relative to Yahoo/YHOO and relative to itself (Google's own earnings growth).

Does his final thesis sound familiar? It should; I have argued precisely that point since before Google/GOOG's IPO. That there would be bouts of share price under-performance (a loss of share price momentum), as the E would have need to catch up with the P. Chartists term this sideways price action a "base." So while many "investors" buy and sell during Google/GOOG's 18 month (and counting) high level consolidation, you have stood your investment ground. Whatever the immediate price reaction to tomorrow's earnings report, the base remains. (Barring a breach beneath crucial support at $450-430, which appears increasingly unlikely.)

I have shown the subtle clues (most recently, here) that reveal an increasing number of "investors" scramble to climb back aboard this particular investment ride; it is this (their) buying that will give final shape to this base, and when at last the marginal buyer buys, the breakout will occur.

Of course, we welcome them all.
-- David M Gordon / The Deipnosophist


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