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 July 2008

Lions and tigers and bears, oh my!

Yeah, okay, so Google/GOOG shares 'plummet' -- at least seemingly.

You can read a pretty fair explanation of Wall's Street's reception of Google's earnings report here. To Blodget's thoughts I would add that Google's practice has been not to play the mug's game of 'guidance'. This decision cuts both ways for any stock, up and down, but providing guidance also cuts both ways. I prefer Google continue their practice of no guidance.

Any way you slice it, with the exception of the 'whisper' game, Google's earnings report is phenomenal. Sure the Law of Big Numbers begins to catch up to Google, and other questions arise as a result of this earnings report... But, then, when does an investor ever not have questions and concerns that cause he or she to pause before taking action, if at all? Truth is that, for Google/GOOG, as with all growth stocks, a declining p is heading towards a (still) rising e, and within its t continuum. (P = price, e = eanings, and t = time.)

The continuum for Google's shares continues as well, despite the noticeable decline today. Price oscillations of ~10% occur regularly for all stocks, although Google's -$50 somehow seems more horrific than a $50 stock declining $5. No, the decline today amounts to intra-trend volatility -- mere noise, not a signal! -- despite its scary nature.

From my perspective, Google/GOOG still qualifies as a buy. Although not quite yet.

Full Disclosure: Long Google/GOOG.
-- David M Gordon / The Deipnosophist

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